Understanding Federal PLUS loan borrowing

You must repay your loans, even if your student:

  • does not complete his or her education;
  • is not employed upon completion of his or her studies; or
  • feels that the education he or she received did not meet expectations.

Generally, federal student loans may not be cancelled or discharged due to bankruptcy.

Always borrow conservatively!

  • Before you decide on the amount you need to borrow, review the actual out-of-pocket costs your student will incur against the financial aid and other resources available.
  • The school may award a PLUS loan up to your student's cost of education minus any other financial aid, including scholarships. This is the MAXIMUM amount you may borrow. Only borrow what you need.
  • Remember, you can apply for another Federal PLUS loan during the academic year if you discover you need more funding, as long as you don't exceed the cost of education, less financial aid.
  • You may reduce or cancel your loan at any time before you receive the loan funds.
  • The lender will forward the Federal PLUS loan check to the school (unless your student is at a foreign school).
  • You, as the borrower, will receive a Notice of Disclosure (NOD) from the lender. The NOD will detail the loan amount and interest rate, estimate the amount of interest that may be charged, and estimate monthly payments attributable to the loan.
  • You would normally be required to start repayment on your loan effective the date the loan is fully disbursed, with the first payment due no more than 60 days later. However, for loans first disbursed on or after July 1, 2008, you can request to defer repayment during the time you (or your child) is enrolled at least half time and until six months after you (or your child) graduate, withdraw, or drop below half-time enrollment. Interest will continue to accrue on the loan even if it is deferred.

Satisfactory academic progress

Your student must meet satisfactory academic progress standards set by his or her school in order to receive federal student aid!

Withdrawals and refunds


  • The law specifies the amount of financial assistance the student earns each academic year and how the school determines eligibility.
  • If the student withdraws, the school uses a specific formula to calculate how much aid he or she has earned to that point.
    • If the student received less assistance than the amount earned, he or she will be able to receive those additional funds.
    • If the student received more assistance than he or she was entitled to, the excess funds must be returned to the lender or program.

If the student ceases attendance at the school before the end of the loan period, the school may be required to refund all or part of the student's financial aid. Please contact the school for its published refund policy.

Loan servicers and sales


  • Frequently, lenders contract with loan servicers to maintain student loan records and files. Your servicer is responsible for processing payments or deferments, among other duties.
  • In other cases, the lender sells the loan. You must direct future payment, correspondence, and questions to the new loan holder.