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 to receive the additional Unsubsidized Stafford Loan that an independent student would be eligible for.
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 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 6.84%. The interest rate is not subsidized while the student is in school. The Parent PLUS loan also has a loan origination fee of 4.272% for those loans disbursed after October 1, 2015. See the example below to determine the amount you will need to cover the amount of the tuition bill, remeber to apply for 4.272% above the amount you need as the PLUS loan does have an origination fee
|Loan Year||Fee||Gross amount||Net amount|
First disbursed on or after
October 1, 2015 and before
October 1, 2016
$427.20 fee amount
$9,572.80 Net loan amount after fee.
This is what will actually be disbursed to the
For a $10,000 loan that the parent applies for.
Repayment begins within 60 days after disbursement. Parent PLUS loan borrowers may choose to have repayment deferred (postponed) 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. Unless requested, there is no six month grace period. Payments can be deferred if the parent is in school themselves. Please note, 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 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 must be enrolled in school at least half-time, a dependent of the parent completing the loan application, eligible for student aid, and both the parent and student must be a citizen or eligible non-citizen. REMEMBER: The loan has a 4.272% origination fee so if you are looking to cover the exact balance of the tuition bill, please make sure to apply for 4.272% more than the exact amount or you will be short by this percentage.
Also, it should be noted that students who are selected for verification, must complete the verification process before any aid, including the PLUS loan, can be applied to their account.
The PLUS loan is a 2 step process:
- The parent must "Request a Direct PLUS Loan"
- Then select the "Parent PLUS"
- If the Parent is approved, that parent must "Complete the MPN"
Step by Step Parent PLUS Loan Process
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