You, the parent borrower, are legally responsible for repaying the loan.
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.
If the student's parents are divorced, both the custodial parent and the noncustodial parent are eligible to borrow from the PLUS loan program, provided that the combined amounts borrowed do not exceed the cost-of-attendance minus aid received cap.
After logging in, you'll be given the option to select your applicable role to fill out the FAFSA form: “Student” or “Parent.” You (the student) should select “Student.” If a parent wants to start their dependent child's FAFSA form, they should select the “Parent” option.
In summary, it is the student who creates the FAFSA account, but both the parent and the student need to fill out the form and enter pertinent information.
Eligible parents of eligible dependent undergraduate students should apply for a parent PLUS loan with a Direct PLUS Loan Application. Parents and students can't share the same account username and password (FSA ID).
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.
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.
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.
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.
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.
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.
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.
Nothing happens to Parent PLUS Loans in a divorce. The person who filled out the FAFSA paperwork and signed the promissory note remains responsible for repaying the debt. The lender will continue to hound the parent-borrower for payment. The divorce decree doesn't change that responsibility.
Parent PLUS Loan Repayment Terms
Only the parent borrower is required to pay back a Parent PLUS Loan, as only the parent signed the master promissory note for the Parent PLUS Loan. The student is not responsible for repaying a Parent PLUS Loan. They're under no legal obligation to do so.
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.
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.
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.
You must complete a Direct PLUS Application for each year you wish to receive a parent PLUS loan. Complete the Direct PLUS Loan Application.
We strongly recommend that your child, the student, start their own FAFSA form and complete their sections first to save time and prevent errors.
Administered by the U.S. Department of Education, FAFSA is a form used by students in the U.S. to apply for federal financial aid, including grants, loans, and work-study programs. In reality, there are no specific income caps for federal financial aid through FAFSA.
Each child must start their own FAFSA form and complete their required sections. Each child will need to invite you to complete their FAFSA form. You will receive separate invitation emails to complete the FAFSA form for each child. You must complete all required parent sections for each child's FAFSA form.