Financial Aid

Plus Loans (Loans to Parents)

PLUS Loans enable parents who do not have an adverse credit history to borrow to pay the education expenses of each child who is a dependent undergraduate student enrolled at least half time.

Are there any borrowing requirements my parents have to meet?

Yes.  To be eligible to receive a PLUS Loan, your parents generally will be required to pass a credit check.  If they don't pass the credit check, they might still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan and promises to repay it if your parents should fail to do so.  Your parents might also qualify for a loan even if they don't pass the credit check if they can demonstrate that extenuating circumstances exist.  You must meet the general eligibility requirements for federal student aid.  Your parents must also meet some of these general requirements.  For example, your parents must meet citizenship requirements and may not be in default or owe a refund to any SFA program.

How much can my parents borrow?

The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive.  For example, if your cost of attendance is $11,000 and you receive $6,000 in other financial aid, your parents could borrow up to-but not more than-$5,000.

What's the interest rate on PLUS Loans?

The interest rate could change each year of repayment, but, by law, it will never exceed 9 percent.  The interest rate for PLUS Loans in repayment from July 1, 2006 to June 30, 2007, is calculated at 8.5 percent.  The interest rate is adjusted each year on July 1.  Your parents will be notified of interest rate changes throughout the life of their loan.  Interest is charged on the loan from the date that the first disbursement is made until the loan is paid in full.

How will my parents be paid?

The loan funds will be sent to Lake Superior College by the lender.  In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount.  The funds will first be used to pay for your tuition, fees, room and board, and other school charges.  If any loan money remains, your parents will receive the amount as a check.  Any remaining loan money must be used for your educational expenses.

Is there a charge for a PLUS Loan?

Your parents will pay a fee of up to 4 percent of the loan.  This fee is deducted proportionately each time a loan disbursement is made.  A portion of this fee goes to the federal government and a portion goes to the guaranty agency to help reduce the cost of the loans.  Also, if your parents don't make their loan payments when they're scheduled, your parents may be charged collection costs and late fees.

When do my parents begin repaying a PLUS Loan?

Generally, repayment must begin within 60 days after the final loan disbursement for the period of enrollment for which you borrowed.  There is no grace period for these loans.  This means that interest begins to accumulate at the time the first disbursement is made.  Your parents must begin repaying both principal and interest while you're in school.

Is it ever possible to postpone repayment of a PLUS Loan?

Yes.  Under certain circumstances, your parents can receive a deferment or forbearance on their loan.  Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance that apply to Stafford Loans also apply to PLUS Loans.  However, since all PLUS Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance.  If they do not pay the interest as it accrues, it will be capitalized.

Can a PLUS Loan be discharged (canceled)?

Yes, under certain conditions.  A discharge releases your parents from all obligations to repay the loan.

Your parents' loan cannot be discharged because you didn't complete your program of study, didn't like the program of study, or didn't obtain employment after completing the program of study.

For more information about loan discharge or repayment contact the lenders or guaranty agencies that hold your loans.

Application Procedures

• Complete the Free Application for Federal Student Aid (FAFSA).

• After you have completed the FAFSA, Lake Superior College will determine your eligibility for Stafford Loans and send you an award letter.

• If, after receiving the award letter, you feel your parents need to borrow a PLUS loan, have them complete the online PLUS Master Promissory Note (MPN).

  At the site, you will be prompted to choose the college you will be attending (Lake Superior College) and the lender you wish to use to borrow the PLUS loan.

  You will then be connected to the PLUS loan promissory note.

• Complete the online promissory note.

• You will be given the option to print and sign your promissory note or sign it electronically.  If you choose to print your promissory note, you must mail it directly to EASCI.

• EASCI, the guarantee agency, will perform a credit check and you will be notified if your application is denied.

• Lake Superior College is also notified if your application is denied.

• If you are approved, you will be mailed a disclosure statement listing the disbursement amounts and the dates of disbursement.

Questions or comments about this page may be sent to the Lake Superior College Webmaster at webmaster@lsc.edu.

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