Unless you have current collections it's pretty easy to get approved for a parent loan, your credit score is fine. If you're declined you can appeal and prove you've paid off anything.
You cannot have an “adverse credit history.” While there's no minimum credit score requirement, loan defaults, bankruptcies, tax liens and certain other negative marks on your credit report could disqualify you.
If you're a parent or graduate student seeking a Direct PLUS Loan, one of the requirements to qualify is that you must not have an adverse credit history. If your application is denied because of an adverse credit history, don't give up. You still have options.
The parent, not the student, is responsible for repaying the PLUS loan. PLUS loans don't qualify for all of the income-driven repayment (IDR) plans that student loans do. PLUS loans have large borrowing limits, making it possible to take on too much debt.
According to the most recently available data from the National Center for Education Statistics (NCES), the average loan amount for Parent PLUS loans in 2019-2020 was $34,630. When adjusting for inflation, that's $37,970 in 2021-2022 constant dollars.
Parent PLUS loans can potentially be forgiven after 10 years under specific conditions, such as through the Public Service Loan Forgiveness (PSLF) program after consolidation into a direct consolidation loan. Parent borrowers must enroll in the Income-Contingent Repayment (ICR) plan to qualify for PSLF.
How to Use the Double Consolidation Loophole: The key to using the double consolidation loophole is to consolidate each of your Parent PLUS Loans twice. In this scenario, a borrower can have as few as two Parent PLUS Loans.
With Parent PLUS loans, the parent can borrow up to the cost of the child's attendance each year, minus any financial assistance that has been awarded, with no limit on the amount borrowed. This is true regardless of the parent's income.
How long does processing take? Due to the value of PLUS applications at peak times (particularly summer and the start of the Fall term), PLUS loans can take 4 weeks for processing and for the loan to be posted on the student's financial aid summary.
Eligibility for Federal Parent PLUS Loans
Dependent student must be making satisfactory academic progress, such as maintaining at least a 2.0 GPA on a 4.0 scale in college. Parent and dependent student aren't in default on a federal student loan or grant overpayment.
While Parent PLUS Loans have a rate of 8.05%, the rate for undergraduate loans is just 5.50%. Plus, the loans are solely in your child's name, so they won't impact your credit or debt-to-income ratio.
Requirements for parents:
You must be the biological or adoptive parent of a dependent undergraduate student enrolled at least half-time. You must be a U.S. citizen or eligible non-citizen. You generally must meet minimal credit standards, and the student must meet general eligibility requirements for financial aid.
Does my debt-to-income ratio, credit score, or employment status count against me when I apply for a PLUS loan? These factors aren't taken into account when credit history is reviewed. A lack of credit is not considered adverse credit. write-off of federal student aid debt.
Parents are able to borrow up to the full cost of attendance, less any financial aid received by their child. Cannot be transferred to borrowers. Parents are legally required to repay student loans and they cannot typically be transferred to the student. No Credit Score Requirements.
Completing the Online Application: (Note: The online PLUS application for 2024-2025 should not be submitted before June 1, 2024.) You may apply for a Direct PLUS Loan at www.studentaid.gov.
To be eligible for a Direct PLUS Loan for parents, you must be a biological or adoptive parent (or in some cases a stepparent), not have an adverse credit history, and meet the general eligibility requirements for federal student aid (which the child must meet as well).
Unlike all other federal student loans, there are no explicit borrowing limits for parent PLUS loans. Parents may borrow up to the full cost of attendance, which is determined by the institution, not the government, and includes books, travel and living expenses.
The $100,000 Loophole.
With a larger below-market loan, the $100,000 loophole can save you from unwanted tax results. To qualify for this loophole, all outstanding loans between you and the borrower must aggregate to $100,000 or less.
This repayment plan leads to loan forgiveness after 25 years under normal conditions, but borrowers pursuing PSLF could have remaining debt forgiven after 10 years (if you still have a balance left). Also note that monthly payments on the ICR plan are not capped, so there's no limit on how high they can go.
The maximum PLUS loan amount you can borrow is the cost of attendance at the school your child will attend minus any other financial assistance your child receives. The cost of attendance is determined by the school.
Based on the information from Federal Student Aid, as of 2022, the average Parent PLUS Loan debt is $29,528. Although that might not sound like a huge amount, it depends on the parent's income.
What happens to my parent's PLUS loan if my parent dies or if I die? Your parent's PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.
Generally, you'll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. Your required monthly payment amount will vary depending on how much you borrowed, the interest rates on your loans, and your repayment plan. Choose a repayment plan that best meets your needs.