Lana Oconnell
Parent PLUS Loans are unsubsidized federal loans that parents of dependent undergraduate students can use to help pay for educational expenses not covered by other financial aid. The loan is made to a parent and cannot be transferred to the child, meaning the parent is responsible for repaying the loan. The money goes directly to the school, and if there is any leftover, the funds are sent to the parent or the student with the parent's permission.
| Characteristics | Values |
|---|---|
| Who is responsible for repayment? | The parent is responsible for repaying the loan. Repayment begins 60 days after the final disbursement for that academic year. |
| Can the loan be transferred to the student? | No, the repayment responsibility cannot be transferred to the student. |
| Who can apply for the loan? | Parents of dependent undergraduate students can apply for Parent PLUS Loans to help pay for educational expenses not covered by other financial aid. |
| What is the eligibility criteria? | Parents and students must be U.S. citizens or eligible non-citizens and must not be in default on any federal loans or owe an overpayment on a federal grant. The student must be under 24, unmarried, and have no legal dependents when applying. |
| What is the interest rate? | Loans disbursed between July 1, 2022, and June 30, 2023, have a fixed interest rate of 7.54%. Loans from the previous year have a fixed interest rate of 6.28%. |
| Are there any fees? | There is a 4.228% loan origination fee on all Parent PLUS Loans first disbursed on or after October 1, 2020. |
| How much can be borrowed? | Parents can borrow up to the student's cost of attendance minus any other financial assistance received. There is an annual limit of $20,000 per child and a lifetime limit of $65,000 per student. |
| Where does the loan money go? | The loan money goes directly to the school to pay for tuition, fees, room and board, and other charges. Any leftover funds are sent to the parent or student. |
| What if the parent gets denied? | Parents can seek a co-signer or endorser, or contact the Student Loan Support Center for reconsideration. |
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What You'll Learn
- Parent PLUS loans are the responsibility of the parent, not the student
- Parents must reapply for the loan each academic year
- Parents can request a deferment if their child is enrolled half-time
- Students must be under 24, unmarried, and have no legal dependents
- Private student loans may offer a lower rate than Parent PLUS loans
Parent PLUS loans are the responsibility of the parent, not the student
Parent PLUS loans are designed to help parents pay for their child's education. They are federal loans that parents of dependent undergraduate students can use to cover educational expenses not included in other financial aid. The money from these loans goes directly to the school, and if there is any leftover, the funds are sent to the parent or the student with the parent's permission.
It is important to note that Parent PLUS loans are the responsibility of the parent, not the student. The parent whose information is listed on the FAFSA (Free Application for Federal Student Aid) will be the one responsible for repaying the loan. This loan cannot be transferred to the child, and repayment begins 60 days after the final disbursement for that academic year. While the student is in school, interest accrues, but parents can choose to pay it off as they go. Parents can also request deferment for each academic year while their student is enrolled at least half-time, and they will have a six-month grace period after the student leaves school before payments start.
The eligibility criteria for Parent PLUS loans include that parents and students must be US citizens or eligible non-citizens, and neither can be in default on any federal loans or owe overpayments on federal grants. The student must be under 24, unmarried, and have no legal dependents when submitting the FAFSA. Additionally, the parent must be the student's biological, adoptive, or step-parent, and neither the parent nor the endorser can have an adverse credit history.
If a parent is denied a Parent PLUS loan, they have the option of seeking a co-signer or endorser. An endorser is someone with a good credit history who agrees to repay the loan if the borrower defaults. Endorsers are legally responsible for repaying the loan, including interest, late fees, and collection costs. Therefore, it is crucial for parents to carefully consider their options and understand the terms and conditions of Parent PLUS loans before applying.
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Parents must reapply for the loan each academic year
Parents must reapply for a Parent PLUS Loan each academic year. The application process includes completing the FAFSA, requesting the loan through the school's financial aid office, and passing a credit check. Renewal applications simplify the reapplication process but are still required annually.
The Free Application for Federal Student Aid (FAFSA) must be completed as a prerequisite for applying for a Parent PLUS Loan. The FAFSA form is used to apply for financial aid for one school year, so a new FAFSA form must be submitted each year to continue receiving aid. A credit check is performed annually to ensure the borrower does not have an adverse credit history. While there is no specific credit score requirement, applicants must not have any defaults, foreclosures, or late payments within the last five years. A score of at least 640 is recommended for better approval chances.
The Parent PLUS Loan is a type of Direct PLUS Loan, which is offered to parents with a student enrolled at least part-time in an eligible education program. It is important to note that the interest rate for Parent PLUS Loans can change on July 1 each year, but once the loan is taken out, the rate remains fixed for the life of the loan. As of July 1, 2025, the interest rate for Parent PLUS Loans is 8.94%. Additionally, there is a fee of 4.228% of the loan amount for loans disbursed on or after October 1, 2020.
Parents should also be aware that they cannot transfer repayment responsibility for Parent PLUS Loans to the student. Repayment typically begins 60 days after the final disbursement for the academic year, and interest accrues while the student is in school. However, deferment can be requested for each academic year while the student is enrolled at least half-time.
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Parents can request a deferment if their child is enrolled half-time
Parents can request a deferment on a Parent PLUS Loan if their child is enrolled at least half-time at an eligible school. This means that parents can postpone payments until their child is no longer enrolled at least half-time, which can include up to six months after their child graduates or drops below half-time enrollment. This is known as in-school deferment.
It is important to note that interest will continue to accrue on the loan during the deferment period, and this interest will be capitalized and added to the balance when repayment begins. This will increase the total amount repaid. Therefore, even though deferment is an option, it may not be the best choice financially.
To request a deferment, parents must complete and submit an application to their loan servicer. This can often be done when applying for the loan, depending on the school's procedures. Additionally, parents can apply for deferment when submitting information to their child's school as part of the Free Application for Federal Student Aid (FAFSA).
While deferment can provide temporary relief from loan payments, it is important for parents to consider the long-term financial implications and explore other options, such as paying the interest during the deferment period or enrolling in an Income-Contingent Repayment plan. Seeking guidance from financial advisors or student loan experts can help parents make informed decisions regarding their loan repayment strategy.
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Students must be under 24, unmarried, and have no legal dependents
To be eligible for a Parent PLUS Loan, students must be under 24, unmarried, and have no legal dependents. This information must be submitted when filling out the Free Application for Federal Student Aid (FAFSA). The FAFSA form is where the option for a parent PLUS loan will first appear. It is important to note that the parent PLUS loan is a federal loan that parents of dependent undergraduate students can use to help pay for educational expenses not covered by other financial aid.
The student must be enrolled at least half of the time, and the money from the loan goes directly to the school. If there is any money left over, the funds are sent to the parent or the student with the parent's permission. The parent is responsible for repaying the loan, and repayment begins 60 days after the final disbursement for that academic year. Disbursements are made based on school terms, and there are no prepayment penalties, so early repayment is an option.
It is also important to note that the parent PLUS loan cannot be transferred to the student. If the goal is for the student to be responsible for the debt, consider cosigning a private student loan instead. Most private student loans allow students to apply for cosigner release, where the cosigner can be removed if the student makes 12 to 24 on-time payments and meets all other eligibility requirements.
Parents can apply for a Parent PLUS Loan online at https://studentaid.gov/plus-app/. They will need to reapply for the loan each new academic year.
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Private student loans may offer a lower rate than Parent PLUS loans
When it comes to financing a student's college education, parents often consider taking out loans. Two common options are Parent PLUS Loans and private student loans. While both can be used to cover the cost of attendance, there are several key differences between the two.
One of the most significant differences is the interest rate. Private student loans may offer a lower interest rate than Parent PLUS Loans for well-qualified applicants. The interest rates for private student loans are based on the applicant's creditworthiness, so parents with excellent credit and a low debt-to-income ratio will likely qualify for the lowest rates available. On the other hand, Parent PLUS Loans have a fixed interest rate set by the federal government, which is the same for all borrowers regardless of credit history. For the 2025-26 academic year, the federal student loan interest rate for Parent PLUS Loans is 8.94%.
In addition to potentially lower interest rates, private student loans offer more flexibility in terms of repayment options. Private lenders may offer their own hardship programs, such as forbearance or deferment, which can provide some relief if the borrower faces financial difficulties. However, it is important to note that private student loans are not eligible for income-driven repayment plans or federal student loan forgiveness programs.
Parent PLUS Loans, on the other hand, offer federal protections such as in-school deferment and student loan consolidation to achieve income-contingent repayment. They may also be eligible for Public Service Loan Forgiveness. Additionally, Parent PLUS Loans provide access to longer repayment periods, with a standard repayment term of 10 years compared to as little as 5 years for private parent loans.
The decision between Parent PLUS Loans and private student loans depends on the parent and student's unique financial circumstances and priorities. Parents with strong credit profiles may find that private student loans offer more competitive interest rates and flexible repayment options. However, Parent PLUS Loans can provide peace of mind with their built-in federal protections and extended repayment periods. Ultimately, it is crucial to carefully consider the features and terms of each loan option before making a decision.
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Frequently asked questions
The parent is responsible for repaying the loan. Repayment begins 60 days after the final disbursement for that academic year.
No, repayment responsibility for a Parent PLUS Loan cannot be transferred to the student. If the goal is for the student to be responsible for the debt, consider cosigning a private student loan.
Parents have the option of seeking a co-signer or endorser. The parent may also contact the Student Loan Support Center at 1-800-557-7394 for reconsideration of the initial denial.
