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When Do Parent PLUS Loans Get Disbursed? A Guide for Savvy Parents

The crucial question of when those Parent PLUS Loans actually land in your student’s account boils down to this: Typically, Parent PLUS Loans are disbursed no earlier than ten days before the start of the academic term for which the loan is intended. This timeline is designed to prevent premature spending and ensure funds are available precisely when needed for educational expenses. This timeframe, however, is subject to the specific policies and procedures of the individual school your child attends.

Understanding the Nuances of Parent PLUS Loan Disbursement

Let’s unpack this seemingly simple answer. There’s a lot more brewing beneath the surface. The exact timing of the disbursement depends on several interwoven factors, making it essential to understand the entire process.

The Role of the School

The linchpin in this whole process is, unequivocally, the school your child is attending. Schools are responsible for certifying the loan, confirming your child’s enrollment, and ensuring they’re making satisfactory academic progress. The school’s financial aid office then coordinates with the Department of Education and the loan servicer to schedule the disbursement.

Certification is Key: Before any funds can be released, the school must certify that your child is eligible for the loan amount requested. This involves verifying enrollment status, cost of attendance, and other financial aid received.
School-Specific Policies: Each school operates with its own calendar, procedures, and disbursement schedules. Some might disburse closer to the start of the term, while others adhere strictly to the ten-day window. Contacting the school’s financial aid office is the best way to get a precise timeline.
Multiple Disbursements: For academic years spanning multiple terms (fall, spring, summer), the loan is typically disbursed in installments. The school will divide the total loan amount and disburse portions at the beginning of each term.

The Government’s Involvement

The U.S. Department of Education oversees the Parent PLUS Loan program and plays a vital role in the disbursement process. Once the school certifies the loan, the Department of Education works with the loan servicer to release the funds. The Department of Education also regulates that the loan proceeds are first applied to the student’s tuition and fees charged by the school. If there are funds left over, then you or the student will receive a refund.

Verification Processes: The Department of Education may conduct random verifications to ensure the accuracy of information provided on the loan application. This can potentially delay disbursement, so prompt responses to any requests for documentation are critical.
System Glitches: While rare, system glitches or administrative delays within the Department of Education can sometimes impact disbursement timelines. Keeping open communication with the school can help mitigate these issues.
Loan Servicers: The Department of Education contracts with loan servicers to manage the loan after disbursement. These servicers handle billing, payments, and customer service. Familiarize yourself with your loan servicer’s website and contact information.

Factors That Can Cause Delays

Even when everyone is doing their job, factors outside your control can cause delays. Awareness of these potential pitfalls can help you prepare and proactively address any hiccups.

Incomplete Applications: A common culprit is an incomplete or inaccurate loan application. Double-check all information before submitting to avoid delays.
Credit Issues: While the credit requirements for Parent PLUS Loans are generally less stringent than private loans, a negative credit history can still impact approval and subsequent disbursement.
School Closures or Disruptions: Unforeseen events like school closures due to weather or other emergencies can disrupt the disbursement schedule.
High Volume Periods: Disbursement times can be longer during peak periods, such as the start of a new semester when financial aid offices are swamped with applications and processing requests.

Proactive Steps You Can Take

Don’t just sit back and wait! Taking proactive steps can significantly improve the likelihood of timely loan disbursement.

Submit the Application Early: The golden rule! Apply for the Parent PLUS Loan as early as possible. This gives the school and the Department of Education ample time to process your application.
Communicate with the School: Stay in regular contact with the school’s financial aid office. They are your best resource for information regarding disbursement schedules and any potential issues.
Complete All Required Paperwork: Ensure all required documents, such as the Master Promissory Note (MPN), are completed accurately and submitted promptly.
Monitor Your Account: Regularly check your student’s school account and your loan servicer account for updates on the disbursement status.
Have a Backup Plan: In case of unforeseen delays, have a backup plan in place to cover expenses such as tuition and housing. This might involve a short-term payment plan with the school or a line of credit.

Frequently Asked Questions (FAQs)

Here are the answers to some common questions to clarify the nuances of Parent PLUS Loans and the loan disbursement process.

1. What happens if my Parent PLUS Loan is not disbursed on time?

If your loan isn’t disbursed on time, immediately contact the school’s financial aid office. They can investigate the delay and provide updates. If the delay is significant, discuss alternative payment options with the school to avoid late fees or enrollment issues.

2. Can I request a specific disbursement date for my Parent PLUS Loan?

Generally, no. The disbursement date is determined by the school’s schedule and the processing times of the Department of Education. However, communicating with the school’s financial aid office about your concerns is always a good idea.

3. Where does the Parent PLUS Loan money go once it’s disbursed?

The loan funds are typically sent directly to the school and applied to your child’s tuition, fees, and other school-related expenses. Any remaining funds are then refunded to you or your child, depending on the school’s policy and your preference indicated during the application process.

4. How will I know when the Parent PLUS Loan has been disbursed?

You’ll typically receive a notification from the school, the loan servicer, or both. Check your student’s school account online, and monitor your email for updates.

5. Is it possible to cancel a Parent PLUS Loan after it has been disbursed?

Yes, you have the right to cancel all or a portion of a Parent PLUS Loan within a specified timeframe, usually 120 days from the disbursement date. Contact the school and the loan servicer to initiate the cancellation process.

6. Does the Parent PLUS Loan disbursement amount include fees?

Yes, the loan amount includes fees charged by the Department of Education. These fees are deducted from the total loan amount before disbursement.

7. What if the Parent PLUS Loan amount is more than what my child needs for school?

If the loan amount exceeds your child’s educational expenses, the excess funds will be refunded. You can use these funds to pay other educational costs or return them to the loan servicer to reduce the principal balance and interest accrued.

8. Can I use the Parent PLUS Loan to cover past educational expenses?

No, Parent PLUS Loans are intended for current or upcoming educational expenses. They cannot be used to retroactively pay for past expenses.

9. Are Parent PLUS Loans subject to sequestration?

While government programs can be subject to sequestration, which can affect interest rates and fees, these changes are typically communicated well in advance. Stay informed about any potential policy changes through the Department of Education’s website.

10. What is the difference between subsidized and unsubsidized Parent PLUS Loans?

Parent PLUS Loans are unsubsidized, meaning that interest accrues from the moment the loan is disbursed. Subsidized loans, on the other hand, do not accrue interest while the student is enrolled at least half-time.

11. How does a Parent PLUS Loan affect my credit score?

Taking out a Parent PLUS Loan can affect your credit score. The loan will appear on your credit report, and making timely payments will help improve your credit history. Conversely, late or missed payments can negatively impact your credit score.

12. Can I consolidate my Parent PLUS Loan with other federal student loans?

Yes, you can consolidate your Parent PLUS Loan with other eligible federal student loans through a Direct Consolidation Loan. This can simplify repayment by combining multiple loans into a single loan with a fixed interest rate.

Navigating the world of Parent PLUS Loans can feel overwhelming, but understanding the disbursement process and taking proactive steps can help ensure a smoother experience. By staying informed, communicating with the school, and managing your loan responsibly, you can help your child achieve their educational goals without unnecessary stress. Remember, you are not alone, and the resources are available to guide you every step of the way.