ELIGIBLE PARENTS
You qualify as a parent for purposes of receiving a Direct PLUS loan on behalf of a dependent undergraduate student only if you are: A biological parent of the student; A legal adoptive parent of the student; or.
If a student's parents are divorced, both the custodial and non-custodial parent may borrow a PLUS Loan for their dependent, undergraduate student. A step-parent may only borrow a PLUS Loan if they are married to the custodial parent and their financial information was reported on the FAFSA of record.
You, the parent borrower, are legally responsible for repaying the loan.
Only one parent's name is permitted on the promissory note and the loan record. However, both parents can borrow separate amounts under their own names. A parent borrower must pass a credit check for the loan to be approved. In certain cases, a parent may be asked to provide a co-signer to the loan.
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.
A common misunderstanding area of the Parent Plus loan is legal ownership. These loans are the legal responsibility of the parent who signs the promissory note. This means it is the parent's legal and financial responsibility to repay this loan.
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.
If you're a parent who's taken out a Parent PLUS loan to support your child's higher education expenses, you have a chance to reduce your tax bill for the tax year through this specific deduction, potentially saving up to $2,500 per year.
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.
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.
Though the parent will apply for the parent PLUS loan, the student must fill out the Free Application for Federal Student Aid (FAFSA) form first. Then your school can direct you on how to proceed with the Direct PLUS Loan application. Remember: No FAFSA, no parent PLUS loan.
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. There are no ability-to-repay standards for PLUS loans.
Yes. One or both parents may apply and borrow a PLUS loan.
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.
PLUS loans don't require good credit, making them an ideal option for low-credit borrowers. However, you can't have an adverse credit history, such as bankruptcies or loan defaults within the past five years.
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?
The parent-borrower will have the option to choose "Me" or "The Student." If they choose "The Student," any available refund will be issued to the student. If they choose "Me" (refunds go to the parent-borrower), we are required to issue the refund to the parent- borrower.
Legal Responsibility
Finally, it's important to consider who is legally responsible for repaying the loan. With a Parent PLUS Loan, it's the parent's legal responsibility to repay the loan. You may agree with your child that they will repay the loan, but if they don't, it's your responsibility.
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.
Your parent PLUS loan may be discharged if you (not the child) become totally and permanently disabled, die, or (in some cases) file for bankruptcy. Your parent PLUS loan also may be discharged if the student for whom you borrowed dies.
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.
If a borrower dies, their federal student loans are discharged after the required proof of death is submitted. The borrower's family is not responsible for repaying the loans. A parent PLUS loan is discharged if the parent dies or if the student on whose behalf a parent obtained the loan dies.
The parent who borrowed the PLUS Loan is responsible for the loans in a divorce. Living in one of the community property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin — doesn't automatically shift responsibility from one spouse to other.
When you receive a Parent PLUS Loan, a new tradeline will be added to your credit reports with the account balance, monthly payment amount, and other details. One of the factors that goes into your FICO credit score is your length of credit history, which includes your average age of accounts.