The amount of aid and type your student can receive depends on the cost of attendance at the school your student chooses, enrollment status as a full-time or part-time student, plans to attend school for a full academic year or less, and the student’s financial need as determined by the FAFSA.
Contributions expected from the student and from his or her parents are considered in establishing financial need and determining eligibility for financial aid. The expected family contribution (EFC) is calculated using a mathematical formula established by Congress. This formula analyzes a number of factors to determine financial need, including the following:
- parents’ income and assets;
- the age of the oldest parent;
- the number in the household;
- the number attending college; and
- the student’s income and assets.
The expected family contribution is subtracted from the cost of attendance. The remaining figure is the student’s maximum eligibility for need-based federal student financial aid and other scholarships. However, federal student aid and institutional scholarships are limited, and students should not assume that their full need will be met. Parents should be aware that supplementary programs, such as the Parent Direct PLUS Loan may be a necessary part of funding their student’s education.
Click here to access the EFC Calculator to get an early look at about what you can expect when you fill out the FAFSA. This is a tool that can be very helpful in getting a pre-FAFSA determination. The Expected Family Contribution (EFC) is how much you will be expected to contribute to college costs, and it helps determine how much financial need you have.
What is the Cost of Attendance?
The Cost of Attendance (sometimes called Budget) is the cornerstone of establishing your student’s financial need for one year of enrollment, as it sets a limit on the total financial aid that they may receive.
The cost of attendance (COA) doesn’t just include tuition, books, supplies, and fees. It also takes into account basic living expenses since it is going to cost your student the same amount to live for the next year whether they are in college or not. Federal regulations allow colleges to include those basic living expenses in the cost of attendance.
The costs are categorized as direct educational costs and indirect living costs. Direct educational costs include tuition, books, fees, and supplies. Indirect living costs include basic living expenses such as rent/mortgage, food, transportation, and other personal expenses such as utilities, auto payment, insurance (auto and health), medical and dental expenses, Federal/State taxes, loan fees, etc.
If necessary, budget adjustments are available for students who have child/elder care expenses, student loan fees (actual or average loan origination), a one time computer expense, and internet service costs.
Parent Direct PLUS Loan: What are the eligibility requirements?
You must be the biological or adoptive parent (or, in some cases, the stepparent) of the student for whom you are borrowing. Your child must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program. Generally, your child is considered dependent if he or she is under 24 years of age, has no dependents, and is not married, a veteran, a graduate or professional-degree student, or a ward of the court.
You cannot have an adverse credit history (a credit check will be done). In addition, you and your child must be U.S. citizens or eligible non-citizens, must not be in default on any federal education loans or owe an over-payment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs.
How much can a parent borrow?
There are no set limits for Direct PLUS Loans, but you may not borrow more than the cost of education minus any other financial aid received, such as a Direct Subsidized or Unsubsidized Loan. The Office of Financial Aid will help determine the actual amount you may borrow.
How to Apply for a Federal PLUS Loan
The PLUS Loan application process for parents is listed below. Parent borrowers must apply and qualify for the PLUS loan annually.
Step 1. Your student must complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is the Department of Education’s online application which is required for anyone requesting federal financial aid. Once the student has completed this form the information will be sent to the Office of Financial Aid.
Step 2. Determine the amount of loan debt you can afford. Use the Parent Loan Repayment Calculator to determine how much your loans will cost and what your monthly repayment amount will be.
Step 4. Complete the Federal Direct PLUS Loan Application/ Master Promissory Note on the Department of Education’s web site. Please be sure that the same parent who completes the Master Promissory Note is the same that completes the “Request a PLUS Loan”. When you complete the Loan Application/Master Promissory Note, you will authorize the Department to conduct a credit check. If you are denied the PLUS loan because of an adverse credit history, you may still be eligible to borrow a PLUS loan with a co-signer. If you can’t find a co-signer, then your dependent student becomes eligible for additional unsubsidized Stafford loan funds.
Step 3. Complete the “Request a PLUS Loan” option on the studentloans.gov website after June 1st.
Step 5. You will receive an email confirmation from HCU’s Office of Financial Aid. You must reply and confirm acceptance of your loan before your loan funds will be certified by the school.
New Regulation Implementation for PLUS Loans:
In final regulations implemented March 29, 2015, the Department of Education made changes to the provisions that are used in determining an applicant’s eligibility for a Direct PLUS Loan. The final regulations include three key changes:
- Revised criteria for determining that a Direct PLUS Loan applicant has an adverse credit history, and
- A new loan counseling requirement for applicants who are determined to have an adverse credit history, but who qualify for a Direct PLUS Loan by documenting extenuating circumstances or obtaining an endorser. The applicant must complete the counseling on the Department’s StudentLoans.gov Web site.
- The Department announced that a credit check for a Direct PLUS Loan applicant will remain valid for 180 days instead of the current 90 days.
For more information, please click here where you can find more details about applying for a Parent PLUS loan.