A Parent PLUS loan is typically denied due to adverse credit history, such as recent bankruptcies, foreclosures, tax liens, wage garnishments, or significant delinquent debts (over $2,0085 and 90+ days late) within the last five years, though other general ineligibility (like not being a U.S. citizen or student not enrolled half-time) can also be factors.
If they are denied you have 3 (or 4) options: 1) Appeal the decision; 2) Find someone else to co-sign; 3) Ask for an increase in your unsub loan limit ($4000 more I think); or, 4) Take out a private loan.
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).
Parent PLUS Loans may be denied if borrowers have an adverse credit history, overdue payments, or recent bankruptcy. Parents can appeal a Parent PLUS loan denial with the Department of Education by proving extenuating circumstances caused the credit issues.
Parent PLUS loan borrowers will be limited to $20,000 a year per student. Parent PLUS loan borrowers' lifetime aggregate limit will be $65,000 per student. Direct student loan offers will be prorated for students who are enrolled less than full time.
Credit Score Needed for a Parent PLUS Loan
There is no minimum credit score required for a Parent PLUS Loan. However, borrowers cannot have an adverse credit history as defined by the U.S. Department of Education.
In general, you will be denied if you have adverse credit consisting of any of the following: Bankruptcy discharge within the past five years. Voluntary surrender of personal property to avoid repossession within the last five years. Collateral repossession within the past five years.
A Parent PLUS Loan is anything but a plus for your financial goals. In fact, this kind of borrowing is a special kind of toxic because it involves a student and their mom or dad. The only thing worse than debt is the kind that hangs over a family relationship!
Common Reasons a Mortgage Loan is Denied
Drawbacks of the Parent PLUS Loan
Discharge: Federal parent PLUS loans are rarely discharged for financial difficulties resulting from unemployment, age-related or other illnesses and injuries, or bankruptcy. Nontransferable: Parents cannot transfer the PLUS loan to their student to repay after they finish school.
Log in to your StudentAid.gov account and check “My Activity” to see if your PLUS loan application is on file. Call your school for an update on your PLUS loan award.
The "7-year rule" for student loans generally refers to when negative marks, like defaults, are removed from your credit report (around 7 years after the first missed payment or default date for federal loans, 7.5 years for private loans), but the debt itself doesn't disappear and must be paid off; it's also a benchmark in bankruptcy proceedings where federal loans can become dischargeable after 7 years from when payments were due, though proving "undue hardship" is required and difficult.
A Parent PLUS loan is typically denied due to an "adverse credit history," meaning specific negative credit events like having debts over $2,008 that are 90+ days delinquent, recent charge-offs, collections, tax liens, foreclosures, wage garnishments, or bankruptcy discharges within the last five years. Other reasons can include failing general federal aid requirements or incorrect application information, but the primary hurdle is the credit check for adverse conditions.
A parent PLUS loan enables your parents or stepparents to borrow money that can be applied to your educational expenses. PLUS loans are loaned directly from the federal government to the borrower. This loan is not based on your family's income or asset information provided on the FAFSA.
However, Parent PLUS Loans will be capped at $20,000 per student per year and a $65,000 lifetime limit beginning July 1, 2026. Parents who borrowed before that date can continue borrowing under the current limits for up to three additional years or until their student completes their program. Good news.
Persons eligible to apply for the Parent PLUS loan are: the student's biological parents, adoptive parents, and, in some cases, stepparents. Legal guardians and non-adoptive grandparents or other relatives are not eligible.
Parent PLUS Loans can impact your credit score, but as long as you use the debt responsibly, you likely don't need to worry about anything negative in the long run. That said, there are other reasons to consider avoiding Parent PLUS Loans.
There are nearly 4 million Parent PLUS loan borrowers in the U.S. Recent data from the Department of Education (ED) reveals that as of Q4 2023, 3.8 million people in the U.S. were Parent PLUS loan borrowers. Over the last five years, the number of borrowers has increased by about 200,000 or 5.5%.