Federal Parent Loans (PLUS)
- They are a United States citizen or eligible non-citizen
- They are not in default on a federal student loan
- They do not owe a refund on a federal education grant
Eligibility for a Direct PLUS loan is determined by a credit check. Parents determined to have adverse credit will not be approved. Parents who are denied a PLUS loan may apply with a qualified endorser. An endorser is someone who agrees to repay the loan if you do not repay it.
Only one parent needs to apply for a PLUS loan. If a parent is denied a PLUS loan, a student will be eligible for an increase in the Unsubsidized Stafford Loan.
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. A step-parent who has not adopted the student can only borrow from the PLUS loan program for as long as s/he is married to the custodial parent. A step-parent who is married to the dependent student’s non-custodial parent is not eligible to borrow from the PLUS loan program. Legal guardians are not eligible to borrow from the PLUS loan program.
PLUS loans in the Direct Loan program have a fixed interest rate of 7.21%. The interest rate is not subsidized while the student is in school.
Repayment begins within 60 days after disbursement. Parent PLUS loan borrowers may choose to have repayment deferred while the student, for whom the parent borrowed, is enrolled at least half-time and for an additional six months after that student is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower. The repayment term is up to 10 years. There is not a six month grace period like there is with the Stafford Loans unless the parent requests one. Payments can be deferred if the parent is in school themselves. But note that since the interest rate is not subsidized, it will continue to accrue and will be capitalized when the loan enters repayment.
The Office of Student Financial Aid recommends that parents applying for a Parent Direct PLUS Loan have their student file a FAFSA to be considered for any Federal Student Aid they may qualify for. Please note, the student for which a parent is borrowing must be in school at least half-time, a dependent of the parent filling out the loan application, eligible for student aid, and both the parent and student must be a citizen or eligible non-citizen.
Also it should be noted that students must complete the verification process before any aid, including the PLUS loan, can be applied to their account.
If you need more information about the Direct PLUS Loan program, please visit these sites:
Parent Sites from the Federal Government:
- Department of Education
- Student Aid