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Eligibility for the Direct Unsubsidized Loan and Parent PLUS Loan does not depend on demonstrated financial need, unlike the need-based subsidized federal loans. Even students from wealthy families may qualify for a Direct Unsubsidized Loan and Parent PLUS Loan.
However, students and their parents, if the student is considered a dependent student, must file the FAFSA (Free Application for Federal Student Aid) at www.fafsa.ed.gov to qualify for the Direct Unsubsidized Loan and the Parent PLUS Loan, even if they do not expect to qualify for need-based federal student aid. The FAFSA has always been required for a student to qualify for a Direct Unsubsidized Loan or a Grad PLUS Loan. The requirement to file the FAFSA to qualify for a Parent PLUS Loan began in the 2011-2012 award year.
The goal of this requirement is to ensure that the student receives all of the need-based aid to which he or she is entitled before relying on federal student loans. Families have a tendency to underestimate eligibility for need-based aid and to overestimate eligibility for merit-based aid.
After the student files the FAFSA, the student will need to complete and sign a Master Promissory Note (MPN) for the federal student loans and the parent will need to complete and sign a MPN for the Parent PLUS Loan. The student will also need to undergo entrance loan counseling if he or she is a first-time borrower. Parents should contact their student's college financial aid office to apply for a Parent PLUS Loan.
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