The U.S. Department of Education makes Direct PLUS Loans to eligible parents through schools participating in the Direct Loan Program. (We also offer PLUS loans for graduate or professional students.) A Direct PLUS Loan is commonly referred to as a parent PLUS loan when made to a parent borrower.
Offered by the U.S. Department of Education, the federal Parent PLUS loan is available to parents of undergraduate students who are enrolled at least half-time in an eligible school. To qualify, you must not have adverse credit, which is defined as one of the following: You have delinquent debts of $2,085 or higher.
However, Parent PLUS Loans have several drawbacks, including being relatively expensive and typically not dischargeable in bankruptcy. They might not be the best option for parents compared to other loan choices, like one with a private lender.
The Parent PLUS loan interest rate – 7.54% as of July 2022 – is generally higher than the rate for a private student loan and potentially higher than the rate on other possible sources of financing. For example, parents who are homeowners may be able to take a cash-out refinance mortgage at a lower rate.
A student loan is borrowed by a student, while a parent loan is borrowed by a parent. While parents can cosign a student loan, the student remains the primary borrower.
Parent PLUS Loans typically have higher interest rates than a student's federal student loans. This means that over the life of the loan, you could end up paying significantly more in interest with a Parent PLUS Loan compared to a federal student loan taken out by a student.
While parents may want to pay for their child's college, a student loan may still be a great option due to the lower interest rate and government subsidies. Ultimately, however, the student is on the hook for payments if the parent cannot come up with the money.
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.
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?
These loans, which are your responsibility to repay, enter repayment 60 days after full disbursement or 6 months after your student graduates or drops below half-time enrollment. There are several repayment options for Parent PLUS Loans.
Drawbacks of the Parent PLUS Loan
Timing: Many parents face high education debt burdens at a time of life when earning power generally decreases and limited income is needed for living or medical expenses. Defaulting on a parent PLUS loan can lead to the garnishment of Social Security benefits, tax refunds and wages.
The parent, not the student, is responsible for repaying the PLUS loan. PLUS loans don't qualify for all of the income-driven repayment plans that student loans do. PLUS loans have large borrowing limits, making it possible to take on too much debt.
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.
A Direct PLUS Loan made to you as a parent cannot be transferred to your child. You are responsible for repaying the loan. Can I ever postpone making loan payments? Yes, under certain circumstances you may receive a deferment or forbearance, which allows you to temporarily stop or lower your payments.
You can borrow up to your child's total cost of attendance minus any financial aid they will receive. To qualify, borrowers must have a dependent child enrolled at least half time in an eligible school. Unfortunately, grandparents and other relatives can't get a parent PLUS loan unless they legally adopt the student.
Parent PLUS Loans are awarded for up to the full cost of attendance minus other financial aid a student's received. Funds are sent directly to the school.
With parent private student loans, you may be able to get a lower interest rate than you would with PLUS loans, but you can't take advantage of federal benefits like income-driven repayment plans (IDR) or Public Service Loan Forgiveness (PSLF).
Even if your child doesn't qualify to refinance parent PLUS loans, talk to them about taking on some payments. You may be surprised by the answer. Unless you transfer the parent PLUS loan to your student, you'll still be legally liable. But their contribution can make repaying the loan more manageable.
Yes, your child can make the monthly payments on your Parent PLUS loan. If you want to avoid having your child apply for student loan refinance, you can simply have them make the Parent PLUS loan payment each month. However, it's important to note that the loan will still be in your name.
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.
How long do you have to pay off parent PLUS loans? You have between 10 and 25 years to pay off your parent PLUS loans, depending on your repayment plan.
The number of children you have attending college, and the gap that's left for their cost of attendance expenses, will decide how much you can borrow through the Parent PLUS program. There's no functional limit to how much you can borrow through the Parent PLUS Loan program.
For a private student loan, lenders have income and credit qualifications that must be met either by the applicant on their own, or with a co-signer. If parents are unable or unwilling to co-sign, you will need to show stable income as well as an established credit history to qualify on your own.
If you're a dependent student, the FAFSA will attempt to measure your family's financial strength to determine your expected family contribution. Therefore, your family's taxed and untaxed income, assets, and benefits (such as funds collected through unemployment or Social Security) should be entered into the FAFSA.