Loans for Parents
Direct Loans for Parents - PLUS
As a result of the Health Care and Education Reconciliation Act, beginning July 1, 2010, federal parent loans will no longer be made by private lenders under the Federal Family Education Loan (FFEL) Program. Instead, all new federal parent loans will come directly from the U.S. Department of Education under the Direct Loan Program.
What is a PLUS (Parent) Loan?
Direct PLUS Loans are unsubsidized loans for the parents of dependent students. PLUS loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods.
This loan is available to creditworthy parents and stepparents of dependent undergraduate students who are enrolled in an institution of higher education on at least a half-time basis.
Applicants must be U. S. citizens or permanent residents.
Parent eligibility requirements for a Direct PLUS Loan
You must be the student's biological or adoptive parent or the student's stepparent, if the biological or adoptive parent has remarried at the time of application. Your child must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program. For financial aid purposes, a student is considered "dependent" if he or she is under 24, unmarried, and has no legal dependents at the time the Free Application for Federal Student Aid is submitted. (Exceptions are made for veterans, wards of court, and other special circumstances.) If a student is considered dependent, then the income and the assets of the parent have to be reported on the FAFSA.
Additional requirements to receive a PLUS loan
Parent PLUS loan borrowers cannot have an adverse credit history (a credit check will be done by the Department of Education). In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for Federal Student Aid programs. You can find more information about these requirements in Funding Education Beyond High School: The Guide to Federal Student Aid available at: www.studentaid.ed.gov.
How much can I borrow?
The amount borrowed cannot exceed the student’s budget or cost of attendance as determined by the school. The total maximum annual loan limit equals the student’s total cost of education minus any other aid received, including student loans.
To determine your student’s Cost of Attendance, please select the appropriate budget from our website www.sbcc.edu/financialaid under Cost of Attendance.
How do I apply for a PLUS Loan?
|1.||Complete the online FAFSA at www.fafsa.gov. For a PLUS loan during the 2016-2017 school year, complete the 2016-2017 FAFSA. The school code for Santa Barbara City College is 001285.|
|2.||Complete the student's financial aid file by complying with document requests from the Financial Aid Office.|
|3.||Parents complete the online PLUS Loan Request at www.studentloans.gov At the Federal Student Aid home page, click on the Log In button. Input your Username and Password, then click Log In. Parents must have their own username and password to access the Direct PLUS application.|
|4.||Click Request a Direct PLUS Loan.|
|5.||Under Select the loan type select Parent PLUS. Complete the application for award year 2016-2017.|
At the end of the Direct PLUS application, click on the hyperlink with student’s name to complete the PLUS Master Promissory Note (MPN).
What happens next?
Within 24 hours of completing your online PLUS application, the PLUS application will be electronically submitted to Santa Barbara City College by the Department of Education. The PLUS application will then be processed by the Financial Aid Office. The PLUS loan can then be viewed as an award on the student’s Pipeline account.
When will I receive my loan money?
Your loan will be processed as an academic year loan disbursed in two equal checks. In accordance with federal regulations, no loan money may be released sooner than ten days prior to the beginning of the semester.
• PLEASE NOTE: Loan money will probably not be received by you in time to make rental deposits, reserve dorm rooms and/or pay rent prior to the beginning of classes. Please be aware that you may have to make other arrangements to meet these obligations.
How do I receive my loan money?
• A check is issued from the school's bank account made payable to the parent borrower. The check is mailed to the parent address given by the parent on the PLUS application.
PLEASE NOTE! PLUS loan checks are always mailed by SBCC to the parent. We will not release PLUS loan checks to students. Please note we are not able to deposit PLUS loan checks into student's personal banking accounts.
Are there any loan fees?
Yes. For Direct PLUS loans with a first disbursement on or after October 1, 2015 and before October 1, 2016, the loan fee is 4.272%. For Direct PLUS loans with a first disbursement on or after October 1, 2016 and before October 1, 2017, the loan fee is 4.276% (Subject to change without notice).
What is the interest rate?
The interest rate for Direct PLUS Loans with a first disbursement on or after July 1, 2016 and before July 1, 2017 is 6.31% (Subject to change without notice). Interest is charged on Direct PLUS Loans during all periods, beginning on the date of the first disbursement. To find out more information on interest rates for Direct PLUS Loans, contact the Direct Loan Servicing Center at 1-800-848-0979.
When do parents begin repaying the PLUS loan?
For PLUS loans made to parents that are first disbursed on or after July 1, 2008, the borrower has the option of beginning repayment on the PLUS loan either 60 days after the loan is fully disbursed or to wait until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.
Contact the Direct Loan Servicing Center at 1-800-848-0979 for information regarding deferments based on student enrollment. Deferments based on student enrollment must be applied for by the parent.
Is it ever possible to postpone repayment of a PLUS Loan?
Yes, under certain circumstances, parents can receive a deferment on their loan. If a parent temporarily can’t meet the repayment schedule, the parent can also receive forbearance on their loan, as long as it isn't in default. During forbearance, payments are postponed or reduced.
Since all PLUS Loans are unsubsidized, interest will be charged during periods of deferment or forbearance. If the interest is not paid as it accrues, it will be capitalized (that is, added to the principal amount of the loan, and additional interest will be based on that higher amount).
Contact the Direct Loan Servicing Center at 800.848.0979 for information regarding deferments and forbearance options.
Can I be denied a PLUS Loan?
Yes. When you apply for a Direct PLUS Loan, the Department of Education will check your credit history. To be eligible for a PLUS Loan, you must not have an adverse credit history.
In addition, your student must meet SBCC’s Satisfactory Academic Progress (SAP) Policy each semester for your loan to be funded. Please review our SAP Policy.
What can I do if my PLUS Loan application is denied?
If you are found to have an adverse credit history by the Department of Education, you may still borrow a PLUS Loan if you obtain an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay the loan. The endorser may not be the student on whose behalf a parent obtains a Direct PLUS Loan. Another option is to document to the satisfaction of the Department of Education that there are extenuating circumstances related to the adverse credit information. With either option, you will also be required to complete the PLUS Counseling at studentloans.gov
If your PLUS loan application is denied and you decide not to pursue an endorser or to appeal the denial of your PLUS loan with the Department of Education, your dependent student has the option of applying for an additional $4,000 Direct unsubsidized loan. To do so, we need the following documents:
- Copy of PLUS denial from the Department of Education,
- A signed letter from you stating you will not appeal the denial of your PLUS Loan,
- Loan Increase Form (available at financial aid office) completed by your student.
Is there a deadline to apply for a PLUS Loan?
Yes. Please check Deadlines for specific dates.
If you have additional questions, please contact our office by emailing your financial aid advisor or by calling the Financial Aid office at 805.730.5157.