20 USC 1078-2 - Federal PLUS loans

U.S Code last checked for updates: May 05, 2024

§ 1078–2.

Federal PLUS loans

(a)

Authority to borrow

(1)

Authority and eligibility

Prior to July 1, 2010, a graduate or professional student or the parents of a dependent student shall be eligible to borrow funds under this section in amounts specified in subsection (b), if—

(A)

the graduate or professional student or the parents do not have an adverse credit history as determined pursuant to regulations promulgated by the Secretary;

(B)

in the case of a graduate or professional student or parent who has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining funds under this subchapter, such graduate or professional student or parent has completed the repayment of such funds to the Secretary, or to the holder in the case of a loan under this subchapter obtained by fraud; and

(C)

the graduate or professional student or the parents meet such other eligibility criteria as the Secretary may establish by regulation, after consultation with guaranty agencies, eligible lenders, and other organizations involved in student financial assistance.

(2)

Terms, conditions, and benefits

(3)

Special rules

(A)

Parent borrowers

(B)

(i)

Extenuating circumstances

An eligible lender may determine that extenuating circumstances exist under the regulations promulgated pursuant to paragraph (1)(A) if, during the period beginning January 1, 2007, and ending December 31, 2009, an applicant for a loan under this section—

(I)

is or has been delinquent for 180 days or fewer on mortgage loan payments or on medical bill payments during such period; and

(II)

does not otherwise have an adverse credit history, as determined by the lender in accordance with the regulations promulgated pursuant to paragraph (1)(A), as such regulations were in effect on the day before May 7, 2008.

(ii)

Definition of mortgage loan

(iii)

Rule of construction

(b)

Limitation based on need

(c)

PLUS loan disbursement

All loans made under this section shall be disbursed in accordance with the requirements of section 1078–7 of this title and shall be disbursed by—

(1)

an electronic transfer of funds from the lender to the eligible institution; or

(2)

a check copayable to the eligible institution and the graduate or professional student or parent borrower.

(d)

Payment of principal and interest

(1)

Commencement of repayment

Repayment of principal on loans made under this section shall commence not later than 60 days after the date such loan is disbursed by the lender, subject to deferral—

(A)

(i)

during any period during which the parent borrower or the graduate or professional student borrower meets the conditions required for a deferral under section 1077(a)(2)(C) or 1078(b)(1)(M) of this title; and

(ii)

upon the request of the parent borrower, during any period during which the student on whose behalf the loan was borrowed by the parent borrower meets the conditions required for a deferral under section 1077(a)(2)(C)(i)(I) or 1078(b)(1)(M)(i)(I) of this title; and

(B)

(i)

in the case of a parent borrower, upon the request of the parent borrower, during the 6-month period beginning on the later of—

(I)

the day after the date the student on whose behalf the loan was borrowed ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); or

(II)

if the parent borrower is also a student, the day after the date such parent borrower ceases to carry at least one-half such a workload; and

(ii)

in the case of a graduate or professional student borrower, during the 6-month period beginning on the day after the date such student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution).

(2)

Capitalization of interest

(A)

In general

Interest on loans made under this section for which payments of principal are deferred pursuant to paragraph (1) shall, if agreed upon by the borrower and the lender—

(i)

be paid monthly or quarterly; or

(ii)

be added to the principal amount of the loan not more frequently than quarterly by the lender.

(B)

Insurable limits

(3)

Subsidies prohibited

(4)

Applicable rates of interest

(5)

Amortization

The amount of the periodic payment and the repayment schedule for any loan made pursuant to this section shall be established by assuming an interest rate equal to the applicable rate of interest at the time the repayment of the principal amount of the loan commences. At the option of the lender, the note or other written evidence of the loan may require that—

(A)

the amount of the periodic payment will be adjusted annually, or

(B)

the period of repayment of principal will be lengthened or shortened,

in order to reflect adjustments in interest rates occurring as a consequence of section 1077a(c)(4) of this title.

(e)

Refinancing

(1)

Refinancing to secure combined payment

(2)

Refinancing to secure variable interest rate

(3)

Refinancing by discharge of previous loan

A borrower who has applied to an original lender for reissuance of a loan under paragraph (2) and who is denied such reissuance may obtain a loan from another lender for the purpose of discharging the loan from such original lender. A loan made for such purpose—

(A)

shall bear interest at the applicable rate of interest provided under section 1077a(c)(4) of this title;

(B)

shall not result in the extension of the duration of the note (other than as permitted under subsection (d)(5)(B));

(C)

may be subject to an additional insurance fee but shall not be subject to the administrative cost charge permitted by paragraph (2) of this subsection; and

(D)

shall be applied to discharge the borrower from any remaining obligation to the original lender with respect to the original loan.

(4)

Certification in lieu of promissory note presentation

(f)

Verification of immigration status and social security number

A parent who wishes to borrow funds under this section shall be subject to verification of the parent’s—

(1)

immigration status in the same manner as immigration status is verified for students under section 1091(g) of this title; and

(2)

social security number in the same manner as social security numbers are verified for students under section 1091(p) of this title.

(Pub. L. 89–329, title IV, § 428B, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1386; amended Pub. L. 100–50, § 10(o), (p)(2), (q), (r)(1), June 3, 1987, 101 Stat. 343, 344; Pub. L. 102–325, title IV, § 418, July 23, 1992, 106 Stat. 531; Pub. L. 103–66, title IV, § 4109(a), Aug. 10, 1993, 107 Stat. 369; Pub. L. 105–178, title VIII, § 8301(a)(2), June 9, 1998, 112 Stat. 497; Pub. L. 105–244, title IV, §§ 416(a)(2), 419, Oct. 7, 1998, 112 Stat. 1680, 1694; Pub. L. 109–171, title VIII, §§ 8005(c), 8014(g), Feb. 8, 2006, 120 Stat. 158, 171; Pub. L. 110–227, §§ 3(a), 4, May 7, 2008, 122 Stat. 742, 743; Pub. L. 110–315, title IV, § 424(a), Aug. 14, 2008, 122 Stat. 3232; Pub. L. 111–39, title IV, § 402(f)(2), July 1, 2009, 123 Stat. 1943; Pub. L. 111–152, title II, § 2205, Mar. 30, 2010, 124 Stat. 1075; Pub. L. 116–260, div. FF, title VII, §§ 702(n)(1)(B), 704(1), Dec. 27, 2020, 134 Stat. 3186, 3199.)

cite as: 20 USC 1078-2