Parent PLUS Refunds
If the student has a Parent PLUS Loan applied to their account as payment and the parent borrower elects to receive a refund to themselves and not to the student, the parent PLUS loan (regardless of the date of disbursement) will be used to cover all eligible institutional charges per 34 CFR 668.164. Any remaining credit will then be refunded to the borrower. Please see the examples below:
1) Student A has $5,000 of institutional charges posted on the student account. Student A receives $3,000 of aid including loans, scholarships and grants. Student A's aid is applied towards the $5,000 in charges leaving a $2,000 balance. Parent A applies for and is approved for $5,500 and elects for any refund from this loan to be sent directly to Parent A. Regardless of whether student A's aid of $3,000 or Parent A's PLUS loan for $5,500 posts first, the parent PLUS loan will always be applied first. In this circumstance, assuming no other charges exist, the parent's $5,500 would be applied to the $5,000 in charges and would result in a $500 refund to the parent. The student's aid of $3000 (assuming no other charges exist) would then be refunded to the student.
2) Student B has $5,000 of institutional charges posted on the student account. Student B receives $3,000 of aid including loans, scholarships, and grants. Student B's aid is applied towards the $5,000 of institutional charges leaving a $2,000 balance. Parent B applies for and is approved for a $1,000 parent PLUS loan. Regardless of which aid posts first, the $1,000 parent PLUS loan would be applied to the $5,000 of institutional charges first, then the $3,000 of student aid would be applied towards the remaining institutional charges, leaving a $1,000 balance owed to the University.
3) Student C has $5,000 of institutional charges posted on the student account. Student C is awarded $5,000 in scholarships, grants, or student loans that are applied to the Student C’s account leaving a zero balance. Parent C then completes the application and/or loan requirements for a Parent PLUS Loan in the amount of $5,000 and requests the refund be sent to the parent. The loan is approved, and disbursed to the student account. The Office of Student Accounts then processes refunds on the next Tuesday/Thursday. The parent’s loan will then cover the $5,000 of institutional charges causing a $5,000 credit balance on the student’s other aid (scholarships, grants, loans). The Office of Student Accounts then refunds $5,000 to the student.