What are PLUS Loans?
PLUS loans are loans your parents can take out to pay for your education expenses if you're a dependent undergraduate student enrolled at least half time. Also, your parents must have no adverse credit history.

How do my parents apply?
Your parents must complete a PLUS loan pre-approval and promissory note. The application is available online at http://www.lsc.edu/financialaid/plusloaninfo.cfm.

Are there any borrowing requirements my parents have to meet?
Yes. Generally, they have to pass a credit check. Your parents may qualify for a loan even if they don't pass the credit check if they can demonstrate that extenuating circumstances exist. They also must not be in default or owe a refund to any FSA program.

Do my parents need to find a lender?
Your parents will need to choose a participating lender from the lender list contained within the master promissory note. NOTE: LSC can refuse to certify your parents? loan application, or can certify a loan for an amount less than they would otherwise be eligible for, if we document the reason for such an action and explain the reason to your parents in writing. LSC's decision is final and cannot be appealed to the U.S. Department of Education.

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 $6,000 and you receive $4,000 in other financial aid, your parents could borrow up to, but no more than, $2,000.

Do my parents get the money, or do I?
The funds are first applied to your tuition, fees, and other school charges. If any loan funds remain, your parents receive the amount as a check or in cash, unless they authorize the amount to be released to you. Any remaining loan funds must be used for your education expenses.

Can my parents cancel the loan if they change their minds, even if they've signed the promissory note agreeing to the loan's terms?
Yes. Your parents may cancel all or a portion of their loan if they inform us within 14 days after the date LSC sends this notice, or by the first day of the payment period, whichever is later. If your parents receive PLUS Loan funds directly by check, they may refuse the funds by not endorsing the check and returning it to Lake Superior College.

What's the interest rate on PLUS Loans?
The interest rate could change each year of repayment but does not exceed 9 percent. For July 1, 2006 to June 30, 2007, the interest rate for PLUS Loans in repayment was 8.5 percent. Interest rates are 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 the first disbursement is made until the loan is paid in full. Other than interest, is there a charge to get a PLUS Loan? Your parents will pay a fee of up to 4 percent of the loan, deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, 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.

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 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.

How do my parents pay back the PLUS loan?
For FFEL PLUS Loans, parents can usually choose the Standard, Extended, Graduated, or Income Sensitive Plan. FFEL PLUS Loans can also be consolidated.

Are there tax credits available for paying back these loans?
Yes, there are tax incentives for certain higher education expenses, including a deduction for student loan interest for certain borrowers. This benefit applies to federal and nonfederal loans taken out to pay for postsecondary education costs. The maximum deduction is $2,500 a year. You can find out more by calling the IRS at 1-800-829-1040. TTY callers should call 1-800-829-4059.

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, as long as the loan isn?t in default. 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 don?t pay the interest as it accrues, it will be capitalized.

Can a PLUS Loan be discharged (cancelled)?
Yes, under certain conditions. A discharge releases your parents from all obligations to repay the loan.
Your parents' PLUS Loan can't be cancelled because you didn't complete your program of study at your school (unless you couldn't complete the program for a valid reason, because the school closed, for example), you didn't like the school or the program of study, or you didn't obtain employment after completing the program of study.
For more information about loan discharge or repayment, your parents should contact the lender or agency holding the loan.

For more Plus Loan FAQ's: Plus Loans Online .