Which federal loan type is available for parents?

Asked by: Gabriella Wilkinson  |  Last update: April 16, 2024
Score: 5/5 (24 votes)

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.

Which federal loan is available for parents?

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.

What is a loan available to parents of students?

Federal direct PLUS loans are government loans that parents can take out to help pay for a child's college education. They have higher interest rates and fees and qualify for fewer repayment plans than federal direct subsidized and unsubsidized loans for students.

Are parent loans subsidized or unsubsidized?

Direct PLUS loans are federal loans that graduate or professional degree students or parents of dependent undergraduate students can use to help pay for education expenses. Direct PLUS loans have a fixed interest rate and are not subsidized, which means that interest accrues while the student is enrolled in school.

Can I get a federal student loan if my parents have money?

The good news is that the Department of Education doesn't have an official income cutoff to qualify for federal financial aid. So, even if you think your parents' income is too high, it's still worth applying (plus, it's free to apply).

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17 related questions found

Can I get financial aid if my parents make over 150k?

There are no set income cutoffs for financial aid because of the number of factors that are included in the need-based calculation beyond income. Unless parents are in a situation where they don't need money for their child to go to school, everyone should fill out the FAFSA.

What if my parents are rich but won t pay for college?

You have multiple options to consider, including federal financial aid, scholarships, grants, a job and student loans. Although paying for college by yourself is a huge financial undertaking, it's possible with enough research, hard work and planning.

Is it better to get a student loan or a parent loan?

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.

Who is eligible for the Direct PLUS loan for parents?

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).

What is a federal direct parent loan?

Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school. PLUS loans can help pay for education expenses not covered by other financial aid.

Are federal parent PLUS loans good?

Parent PLUS loans can be a good alternative to private student loans because they offer more flexible repayment options. But Parent PLUS loans can be costlier than other options, and consequences are harsh for default, including the potential for wage and Social Security garnishment.

How much can I borrow from a parent?

Does the IRS care if I loan money to my kids? For small loans under $10,000, the answer is simple — no. The IRS isn't concerned with most personal loans to your son, daughter, stepchild, or other immediate family member.

What is the difference between a parent PLUS loan and a federal loan?

The biggest difference with parent loans is that you will assume responsibility for the debt. The amount that can be borrowed through federal student loans is ultimately determined by the school your child will attend, taking into account other sources of financial aid and funding.

What is the best option for parents to pay for college?

5. College Savings Plans. Families can plan ahead by saving for future college costs with a 529 plan. A savings account that provides several tax and financial aid advantages, a 529 plan allows families to plan ahead by saving for college tuition or additional expenses related to getting a degree.

Who gets denied a parent PLUS loan?

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.

Does everyone get approved for a parent PLUS loan?

You can qualify for a parent PLUS loan if you meet the following eligibility requirements: You don't have “adverse credit history.” You are the parent of a qualified undergraduate student. You meet basic federal aid requirements.

What is the interest rate on parent PLUS loans 2023?

What is the current interest rate? For Direct PLUS Loans first disbursed on or after July 1, 2023, and before July 1, 2024, the interest rate is 8.05%. This is a fixed interest rate for the life of the loan.

Is it better to do a parent PLUS loan or private loan?

Use Parent PLUS Loans if your credit is less than perfect. Use parent private student loans if you have good credit and can qualify for a lower interest rate. Use parent private student loans if you'd prefer a loan with a variable interest rate.

Can I get a federal student loan without a parent?

“Dependent Versus Independent” Student Loan Options

Whether the student is considered a dependent or independent student on the FAFSA affects federal student loan limits. If the student is independent, parental information is not required on the FAFSA, and the loan limits on the Federal Direct Loans are higher.

Are parent loans considered student loans?

A parent PLUS loan, or Direct PLUS loan, is a form of federal student aid. Once a student reaches federal student loan limits, parent borrowers will often take out a PLUS loan. A parent PLUS loan is an unsubsidized federal direct loan.

What salary is too high for financial aid?

There are no income limits on the FAFSA. Instead, your eligibility for federal student aid depends on how much your college costs and what your family should contribute. Learn how your FAFSA eligibility is calculated and other ways to pay for college if you don't qualify for federal student aid.

What income is too high for FAFSA?

Students often skip filling out the FAFSA because they think their families make too much money to qualify for aid. However, there are no FAFSA income limits, so you can submit it—and potentially get valuable financial aid—regardless of your family's earnings.

At what age does your parents income not matter for college?

A student age 24 or older by Dec. 31 of the award year is considered independent for federal financial aid purposes. Nov.

What disqualifies you from FAFSA?

For example, if your citizenship status changed because your visa expired or it was revoked, then you would be ineligible. Other reasons for financial aid disqualification include: Not maintaining satisfactory progress at your college or degree program. Not filling out the FAFSA each year you are enrolled in school.

At what age does parents income not affect financial aid?

At What Age Does Parents' Income Not Affect Financial Aid? When do dependent students move over to independent status? The FAFSA considers all students aged 24 or older independent. These students do not need to submit FAFSA parent information.