Parent Plus Loans
Parent Plus Loans are low interest Federal Loans available to the parents of eligible dependent undergraduates who file the Free Application for Federal Student Aid (FAFSA) and have exhausted their eligibility for Stafford Loans. Students must be enrolled in at least six (6) credits in any given semester to qualify.
Unlike Stafford Loans, Parent Plus Loans do require that the borrower pass a simplified credit check; parents who fail the credit check can still get the loan if they are able to find an endorser who can pass the credit check, otherwise their child will be offered the independent undergraduate equivalent in Stafford Loans.
The Parent Plus limit is the total Cost of Attendance (as determined by the school) minus other aid received. UMB does not automatically award Parent Plus Loans. The Parent Plus Loans page of the Borrower Disclosure Form must be turned in and the Master Promissory Note signed (completed on www.StudentLoans.gov) before UMB will award and process a Parent Plus Loan.
Parents have the choice to make their first payment either 60 days after the loan is fully disbursed or (as of 7/1/08) six months after the student drops below half-time status.
Students are required to complete all steps, parents must complete all steps except "Accept Awards"
- PIN – pin.ed.gov
The PIN is used to electronically sign financial aid documents with the Department of Education including the Free Application for Federal Student Aid (FAFSA) and Master Promissory Notes (MPN). It is also used as a login for Department of Education websites. The parent and the student must have their own PIN numbers.
- Yearly requirements that must be completed by incoming and returning students
- Free Application for Federal Student Aid (FAFSA) – www.FAFSA.gov
Federal Title IV Code: 002104
The FAFSA is the official application of the Department of Education to determine eligibility for Pell Grants, Stafford Loans and all other federal and most state aid. The priority deadline for this form is March 1st (form goes live January 1st) for prospective (even if not yet accepted) and returning students, late submission could cause a delay of funds. The parent and the student must both sign the FAFSA.
- Accept Awards – SURFS
Students receive an email to their University email account (or email listed on their FAFSA for incoming students) once they are awarded aid instructing them to logon to SURFS (also known as SIMSweb) to accept their awards.
- Borrower Disclosure Form - Click here to view and print
The Borrower Disclosure Form authorizes the Financial Aid Office to process the loans on the student’s behalf and contains additional information on the loans. This is also how parents alert the school that they are applying for a Parent Plus Loan.
- Master Promissory Note (MPN) – www.StudentLoans.gov
Description: The Master Promissory Note (MPN) contains the terms of the loans and is your contract with the Department of Education to repay your loans. Parents must complete the Parent Plus MPN in addition to the students completing the Subsidized/Unsubsidized MPN
- Free Application for Federal Student Aid (FAFSA) – www.FAFSA.gov
Parent Plus Loan borrowers are required to pass a simplified credit check, meaning that the Department of Education is not looking for a certain credit score or for an extensive credit history, but simply the absence of an adverse credit history.
The following will cause a Parent Plus Loan to be denied:
- A current delinquency of 90 days or more, this includes unpaid collection accounts and charge offs.
- Default in the past five years.
- Defaulted loan that has been claim paid.
- Chapter 7, 11 and 12 Bankruptcy (Chapter 13 okay) in the past five years.
- Discharge in the past five years.
- Foreclosure in the past five years.
- Foreclosure proceedings started.
- Deed in lieu of foreclosure.
- Lease or contract terminated by default.
- Repossession in the past five years.
- Tax Lien (County, State or Federal) in the past five years.
- Wage Garnishment in the past five years.
- Voluntary surrender in the past five years.
- Write off of Title IV Debt in the past five years.
Parents denied a Parent Plus Loan will receive a letter from the Department of Education informing them of the denial; UMB will also be notified electronically. Denied parents have three options:
- Review their credit report (which can be done for free on www.annualcreditreport.com) for possible errors and correct any errors before appealing directly with the Department of Education.
- Find a credit-worthy endorser to co-sign on the loan, this endorser will then be responsible for the loan should the student default on the loan at any point during the life of the loan.
- Elect to have the Plus Loan remain denied and the student will be offered additional unsubsidized loans up to the maximum eligibility of an independent undergraduate student.
Steps to be taken by endorser
- Sign up for a PIN number at pin.ed.gov – a PIN is required to electronically sign the endorser addendum.
- Sign onto www.StudentLoans.gov – this is the website where you electronically co-sign the loan.
a. Click on Endorse a Plus Loan (4th link down the center of the page)
b. Enter Loan Reference Number (provided by parent borrower) and follow the instructions.
Origination Fees (4%)
Amount Disbursed to UMB
Q: When are the loans disbursed?
A: Loans are disbursed by the Department of Education to the University no earlier than 10 days before the start of classes each semester.
Q: Who is my lender?
A: Beginning with the 2010-2011 academic year the Department of Education is the lender for all Federal Student Loans (Stafford and Plus Loans) as stated in the Health Care and Education Affordability Reconciliation Act of 2010.
Q: What is an origination fee?
A: An amount taken off the top of the loan before the loan is disbursed (Loan Amount – Origination Fee = Amount received by school).
Q: Why am I not getting an upfront origination fee rebate as in previous years?
A: The Budget Control Act of 2011 eliminated the upfront origination fee rebate. If you had the rebate in previous years please do remember that the rebate must be repaid if you do not make your first 12 consecutive monthly payments on time (within six days of date due).
Q: Why was my loan split?
A: Loans are split evenly between Fall & Spring semesters for all students; depending on the program it is possible students could have their loans split into three between Summer, Fall & Spring semesters.
Q: What happens if my loan is denied?
A: You must get an endorser with a good credit history to co-sign your loan, appeal the denial, or decide to let the loan remain denied and your child will be offered the independent undergraduate limit in Stafford Loans.
Q: When does interest begin?
A: Interest begins after the first disbursement of the loan.
Q: When does repayment begin?
A: Parents have the choice to select in-school deferment so that their first payment is due six months after their child drops below half-time status, otherwise the first payment is due sixty days after the final disbursement.
Q: How much can I borrow in one year?
A: Parents are only limited to the formula of Cost of Attendance minus Other Aid Received, otherwise there is no yearly limit.
Q: What is the aggregate limit for Parent Plus Loans?
A: Parent Plus Loans do not currently have an aggregate limit.
Q: How often does interest accrue?
A: Interest accrues daily starting on the day of disbursement (day the funds are released by the Department of Education). In a typical Fall & Spring academic year this means that interest begins on the first half of the loan in late August (for most programs) and on the entire loan in mid-January (for most programs).
Q: How can I calculate the amount of interest that is accruing on my loan?
A: To determine what your accruing loan interest is on a daily basis you divide your interest rate (converted to decimal) by 365.25 (number of days in a calendar year) this gives you the Interest Rate Factor. Then multiply the Interest Rate Factor by your outstanding principal balance. This is the amount of interest that is accruing daily. The interest rate factor for a 7.9% Parent Plus Loan is 0.000216290212.