When Do Parent PLUS Loans Get Disbursed

#1 Student loan lawyer

Updated on October 9, 2023

When Do Parent PLUS Loans Get Disbursed? Generally, these loans are disbursed at the start of each academic term if certain conditions are fulfilled.

This quick answer, however, only scratches the surface.

The disbursement process involves multiple steps, from meeting eligibility requirements to completing federal paperwork like the Master Promissory Note.

Additionally, the funds are first applied to cover tuition and other university charges, with any remaining balance refunded to the parent borrower.

Ahead, we’ll guide you through the complexities of the Parent PLUS Loan disbursement process, including its timing, mechanics, and what steps to take if you encounter issues.

When Are Parent PLUS Loans Disbursed?

Parent PLUS Loans generally get disbursed at the start of each academic semester. The timing is closely tied to the academic year, and the process can kick off no earlier than 10 days before the semester begins.

But for summer terms, the disbursement date is typically 10 days before the first session starts. If your child is participating in an Education Abroad program, expect the loans to be disbursed in two payments.

Here’s what you need to know:

  • Eligibility: Your child must meet minimum eligibility requirements. Check the requirements and resolve any holds at least a month before the semester starts.

  • Federal Requirements: Your loan application should be approved, and you’ll need to sign the loan agreement, also known as the Master Promissory Note. You can do that when you’re completing the Free Application for Federal Student Aid (FAFSA) form and PLUS Loan application.

  • Verification: Both you and your child may need to provide more documents if selected. This might involve submitting tax returns or W-2 forms to confirm your income.

  • Endorser and Counseling: If you’re approved with an endorser, complete more steps like the “Endorser Addendum” and “PLUS Credit Counseling.”

  • Financial Aid Award: Your child should have received a financial aid award letter.

  • Enrollment: Your child must be enrolled in at least 6 units.

  • Clearance: All financial aid and Student Account Services holds must be cleared.

Once conditions are met, the loan amount is first applied to tuition and other charges. Leftover funds are refunded to you or can go to your child’s bank account if authorized.

Keep an eye on the National Student Loan Database System for updates. Using the NSLDS system on the Federal Student Aid website, StudentAid.gov, will help you confirm that the loan has been disbursed and keeps you updated on which loan servicer is managing your loan.

Related: Do Parent PLUS Loans Have a Grace Period?

How Long Does It Take for a Parent PLUS Loan to Be Disbursed?

Once the disbursement process begins, it usually takes about 3-5 days for the funds to appear in the student’s financial account. Knowing this timeline can help you plan for tuition payments and other immediate expenses, ensuring you’re not surprised by unexpected financial gaps.

Here are factors that affect timing:

  • School Policies: Different schools may have their own timelines for disbursement, so it’s important to consult your child’s financial aid office for specific details.

  • Verification Delays: If you or your child is selected for verification, the process could take longer. Ensure all required documents are submitted promptly.

To avoid delays, complete all necessary paperwork well in advance. If selected for verification, submit the required documents as soon as possible.

How Often Are Parent PLUS Loans Disbursed?

Parent PLUS Loans are disbursed in installments rather than a lump sum. The installment-based disbursement aligns with the academic calendar, allowing for better financial planning across semesters.

Contact the school’s financial aid office to let them know what you want them to do with the remaining loan funds: return it to you or apply it to your child’s account.

This makes sure any leftover balance is allocated as you intend.

How Does Parent PLUS Loan Get Disbursed?

Parent PLUS Loans are disbursed directly to the school, bypassing any other channels. This means the loan funds are sent straight to the college’s financial aid office, ensuring a streamlined process.

Remember that Parent PLUS Loans are in the parent’s name and cannot be transferred to the student. That means you as the parent (biological, adoptive, or sometimes, stepparent) of a dependent undergraduate student enrolled at least half-time at a participating school are legally responsible for paying back the loan.

The only way you can transfer the debt to the student is to refinance the loan with a private lender. But this means giving up federal loan protections like income-driven repayment plans that promise affordable monthly payments and loan forgiveness programs that wipe out the remaining loan balance.

Related: Parent PLUS Loan Repayment Options

How Do I Know if My Parent PLUS Loan Was Approved?

To find out if your Parent PLUS Loan was approved, you can check your confirmation email, contact the Federal Student Aid Information Center, or log in to your Federal Student Aid account. Your chosen school will also be notified within 24 hours of loan approval.

Steps to Check Approval Status

  • Confirmation Email: After submitting your loan request, look for a confirmation email that will confirm your credit approval.

  • Federal Student Aid Information Center: You can call 1-800-433-3243 to ask about your loan status.

  • Online Account: Log in to your Federal Student Aid account to check the status of your loan.

  • School’s Financial Aid Office: Your chosen school will be notified of your loan approval within 24 hours. Contact them for further details on loan eligibility and disbursement timing.

If your approval status is unclear, your first point of contact should be the school’s financial aid office. They can provide the most immediate and specific information about your loan.

Common Issues and Troubleshooting

Common Issues

Possible Reasons

Next Steps

1. Loan denial based on adverse credit history

Adverse credit history

First, appeal the decision with proof of extenuating circumstances. Next, get an endorser.Finally, explore alternative loan options like additional unsubsidized loans for your child or private student loans.

2. Loan disbursement amount discrepancy

Error in account information

Start by contacting the school, servicer, lender, or guaranty agency to correct the information. If the issue persists, contact the Federal Student Aid Ombudsman Group.

3. Loan disbursement delay

Missing MPN, Entrance Loan Counseling, unit mismatch, SAP evaluation incomplete

First, check your financial aid status for steps to resolve the issue. If that doesn't resolve the issue, contact your school's financial aid office.

What Happens After Disbursement?

After the Parent PLUS loan is disbursed, any remaining balance beyond tuition and other school charges will be paid directly to you, unless you’ve authorized otherwise.

Here are three things to remember:

  • Repayment Timing: Payments start right after the last disbursement, but deferrals are possible in some cases.

  • Leftover Funds: You can either return excess funds within 120 days to avoid interest or use them for other qualified educational expenses.

  • Repayment Responsibility: The loan is in your name, and you’re responsible for its repayment. Various plans are available to manage this obligation.

Related: Are Parent PLUS Loans Tax Deductible?

Quick Background on Parent PLUS Loans

Parent PLUS Loans, also known as Direct PLUS Loans, are federal loans designed to fill in the financial gaps not covered by other types of student aid. These loans are available to parents of dependent undergraduate students.

Key Features and Requirements

  • Financial Need: Both you and the student must be U.S. citizens or eligible noncitizens and show a financial need. The most you can borrow is the cost of attendance at the school your child will attend minus any other financial assistance your child receives.

  • Origination Fee: All Federal Direct Parent PLUS Loans have a loan fee. The fee is a percentage of the loan amount. The U.S. Department of Education deducts the fee from each loan disbursement. The percentage for all PLUS loans first disbursed on or after Oct. 1, 2020, is 4.228%.

  • Credit Check: A credit check is part of the application process. If you have an adverse credit history, options like obtaining an endorser may still let you qualify for the loan.

  • Adverse Credit History: Specific criteria, such as debts over $2,085 that are 90 days delinquent, can label you as having an adverse credit history.

If a parent PLUS loan isn’t an option, your child may be eligible for extra unsubsidized loans. Your child should reach out to the school’s financial aid office for more details.

Related: Parent PLUS Loan Maximum Amount

Bottom Line

Understanding the Parent PLUS loan disbursement process is important for effective financial planning.

From meeting initial requirements to managing repayment, being informed is your best asset. If you’re looking for more guidance on how to navigate repayment and forgiveness options for Parent PLUS Loans, we’ve got you covered.

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