What is a Parent PLUS Loan?


Feb 10, 2023

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As college tuition increases, it becomes more challenging for students and their families to pay for educational expenses. Financial aid can help cover some of the costs associated with college, but it’s still very expensive to attend college.

Students and their families can take advantage of loan opportunities to help pay for college. One type of loan — the parent PLUS loan — can help students and families afford a secondary education. 

What is a Parent PLUS Loan?

A Parent PLUS Loan is sometimes referred to as a Direct PLUS Loan. This type of loan is a federal student loan issued by the Department of Education. Parents take out these loans to help their children pay for college, which is growing more expensive every year.

Parents who are a part of the William D. Ford Federal Direct Loan program can take out Parent PLUS Loans, but only if their child is attending a participating school. 

Students are not eligible to take out a Parent PLUS Loan. As its name suggests, only their parents can take out these types of loans, and they’re responsible for paying them off. Unfortunately, grandparents and legal guardians are not able to take out Parent PLUS Loans unless they’ve legally adopted the student attending college.

How Parent PLUS Loans Work

When families fill out the FAFSA (Free Application for Federal Student Aid), one of the options they can apply for is Parent PLUS Loans. They are meant to supplement other financial aid, such as state, federal or school aid, offered to students. 

After filling out the FAFSA, parents send a promissory note from the school their child is attending. The form is usually found on a school’s financial aid webpage, but parents might need to contact the school to find out how to proceed with a Parent PLUS Loan.

Parent PLUS Loans are typically awarded to parents to help them cover the cost of attendance. However, the loan does not cover any of the costs covered by other types of financial aid. Funds from the loan are sent to the school in which the child is enrolled. Any refunds for the loan are sent directly back to the parent(s).

According to the Federal Student Aid website, the current interest rate for Parent Plus Loans is 7.54%. It’s a fixed interest rate, meaning it remains the same throughout the life of the loan.

Parent PLUS Eligibility Requirements

In order to qualify for a Parent PLUS Loan, the borrower must:

  • Meet the general eligibility requirements for federal financial aid
  • Be a biological or adoptive parent of an undergrad student enrolled at least half-time in college or university
  • Not have an adverse credit history (unless additional requirements are met)

One benefit of Parent PLUS Loans is that parents can choose how big or small of a loan they want to take. In other words, parents can choose to take out as little or as much as the maximum amount if they want. 

The official Parent PLUS Loan website has a downloadable PDF to help parents understand the borrowing process, repayment options, an overview of eligibility requirements and more.

Taking Out Loans to Pay for College

Parent PLUS Loans are a viable option for many families in the U.S. Like many other federal loan programs, parents have the flexibility to choose how to repay the loan and can even consolidate their loan into a direct consolidation loan if need be. Consider applying for a Parent PLUS Loan next time you and your family fill out the FAFSA.

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