Federal Direct PLUS Loans

For Parent Borrowers (U.S. Citizens and Permanent Residents)

Parents of dependent students are eligible to apply for a Federal Direct PLUS Loan (Parent Loan) to help pay college costs. A parent who has no adverse credit history may borrow up to the cost of education each year, less any financial aid received by the student. The interest rate for this loan is fixed at 7.9 percent. Repayment begins within 60 days after the final disbursement of the loan. That means if you borrow for school year 2009-2010, the first payment would not be due until May 2010.

New Deferment Option!
Beginning with the 2008-2009 school year, a parent who borrows through the Federal Direct PLUS Loan program may defer making loan payments until 6 months after the student graduates or ceases to be enrolled at least half-time. Interest on the PLUS Loan will continue to accrue and may be paid quarterly. If not paid, interest will be added to the principal amount of the loan not more frequently than quarterly.

A deferment may be requested after the first disbursement appears on the student account. To request a deferment, call Borrower Services at the Direct Loan Servicing Center at 800-848-0979.

Repayment Plans:
A parent borrower generally has from 10 to 25 years to repay the loan, depending on the repayment plan. The monthly payment amount is based on the total loan and the repayment plan. There are three repayment plans:

• Standard Repayment Plan – Fixed monthly payments for up to 10 years.

• Extended Repayment Plan – Fixed monthly payments over a period of time, not to exceed 25 years. This repayment plan is available to borrowers who had no outstanding balance on a Direct Loan as of October 7, 1998 and who have an outstanding balance greater than $30,000.

• Graduated Repayment Plan – Payments that start off lower at first, then gradually increase, usually every two years. A borrower may change plans at any time. There is no penalty for making payments before they are due, or for paying more than the amount due each month.

More information is available at the Federal Student Aid PLUS Loan Web Page.

How to Apply:
To initiate an application for a PLUS Loan, select and print a request form for the appropriate school year:

• Knox College Federal PLUS Loan Request Form for 2009-2010 (PDF)

This form should be completed and signed by one parent and  sent to the Knox College Office of Financial Aid via mail or FAX.  If you need help completing the form or would prefer to receive one by mail, contact the Office of Financial Aid at 800-678-KNOX or 309-341-7149.

If Your PLUS Is Denied:
Dependent students whose parents have been denied eligibility for a Federal Direct PLUS loan have expanded loan limits under the unsubsidized Direct Loan program. Depending on their college costs and financial aid, these students may borrow the maximum Direct Loan limits listed above, plus: $4,000 for the first two years of undergraduate study, and $5,000 for subsequent years of undergraduate study (after completing the first two years.)

The interest rate for the unsubsidized Federal Direct Loan program is 6.8%. Although principal payments on an unsubsidized Direct Loan are deferred while a student is enrolled at least half-time, the borrower is responsible for interest from the date of disbursement. If a borrower chooses not to pay interest during enrollment, the interest will be accrued and then capitalized at the time repayment begins. The borrower has a grace period of six months after graduating, withdrawing, or dropping to less than half-time status before beginning repayment.