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.
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.
No minimum credit score is needed to get a parent PLUS loan. Federal loans aren't like private parent student loans, which use your credit score to determine whether you qualify and what interest rate you'll receive. But parent PLUS loans do have a credit check, and you won't qualify if you have adverse credit history.
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.
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.
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.
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.
What Are Some Reasons to Avoid PLUS Loans? First, PLUS loans have no automatic grace period. Then there's the fact they aren't eligible for most IDR plans. Then, borrowing too much is easy to do, and finally, they're nearly impossible to get out of, even in bankruptcy.
You, the parent borrower, are legally responsible for repaying the loan.
Federal student loans are the most common type of student loan. There are four main types of federal student loans: subsidized, unsubsidized, parent loans, and consolidation loans. There are also private student loans, which generally have higher interest rates and stricter requirements.
If you've been denied a Parent PLUS loan because of an adverse credit history, you can qualify for the loan if you obtain an endorser. An endorser is like a cosigner. The endorser agrees to repay the PLUS loan if the parent defaults or is otherwise unable to repay the debt.
Your Last Resort: Private Loans
These loans have different repayment options than federal loans and will most likely cost you more in interest. Also, they may not have the same kinds of protections in case of disability or death as do the federal loans. Private loans generally should be taken out only as a last resort.
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.
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). Was this page helpful?
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.
One-half of the Parent PLUS Loan is disbursed during the fall and the second half during the spring. Plan ahead and request the full amount you will need for the entire academic year. Increases are limited to one per semester.
One of the biggest benefits of Parent PLUS Loans is that they allow parents to borrow up to the cost of attendance to help their child pay for college. Another pro is that there are no minimum credit score requirements.
The interest rate for Parent PLUS Loans first disbursed on or after July 1, 2024, and before July 1, 2025, is currently 9.08%. This rate is fixed for the life of the loan.
Note: You can request an increase in the amount of a Direct PLUS Loan you previously requested if it's for the same school, same award year, and same student. The loan can't exceed the cost of attendance (COA) minus other aid.
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.
However, federal parent PLUS loans offer a standard fixed interest rate, regardless of credit score or income level. These loans also come with federal benefits and protections, like deferment, forbearance and Income-Contingent Repayment (ICR).
There are no fixed annual or aggregate loan limits for Direct PLUS Loans. The maximum Direct PLUS Loan amount that a graduate/professional student or parent can borrow is the cost of attendance minus other financial aid received. See the annual and aggregate limits for subsidized and unsubsidized loans.