Federal Direct PLUS Loan
Quick Overview of Direct PLUS Loans:
- The U.S. Department of Education is your lender.
- You must not have an adverse credit history. A credit check will be conducted. If you have an adverse credit history, you may still be able to receive a PLUS loan if you meet additional requirements.
- The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received.
Parent Plus Loans
Am I eligible for a parent PLUS loan?
To receive a parent PLUS loan, you must
- be the biological or adoptive parent (or in some cases, the stepparent) of a dependent undergraduate student enrolled at least half-time at an eligible school;
- not have an adverse credit history (unless you meet certain additional requirements); and
- meet the general eligibility requirements for federal student aid
Note: Grandparents (unless they have legally adopted the dependent student) and legal guardians are not eligible to receive parent PLUS loans, even if they have had primary responsibility for raising the student.
What is the current interest rate?
For Direct PLUS Loans first disbursed on or after July 1, 2022, and before July 1, 2023, the interest rate is 7.54%. This is a fixed interest rate for the life of the loan.
How much can I borrow?
The maximum PLUS loan amount you can borrow is the cost of attendance at the school your child will attend minus any other financial assistance your child receives. The cost of attendance is determined by the school.
Do I have to make payments on my loan while my child is still in school?
If you request a deferment, you will not need to make payments while your child is enrolled at least half-time and for an additional six months after your child graduates, leaves school, or drops below half-time enrollment. If the school your child is attending requires you to submit your request for a parent PLUS loan at StudentAid.gov, you’ll have the option of requesting a deferment as part of the loan request process. You can also contact your loan servicer to request a deferment.
If you do not request a deferment, you will be expected to begin making payments after the loan is fully disbursed (paid out).
During any period when you’re not required to make payments, interest will accrue on your loan. You may choose to pay the accrued interest or allow the interest to be capitalized (added to your loan principal balance) when you have to start making payments. Your loan servicer will notify you when your first payment is due.
Can I still receive a parent PLUS loan if I have an adverse credit history?
A credit check will be performed during the application process. If you have an adverse credit history, you may still receive a parent PLUS loan through one of these two options:
- Obtaining an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the parent PLUS loan if you do not repay it. The endorser cannot be the child on whose behalf you are borrowing.
- Documenting to the satisfaction of the U.S. Department of Education that there are extenuating circumstances relating to your adverse credit history.
With either option 1 or option 2, you also must complete credit counseling for parent PLUS loan borrowers.
How do I apply for a parent PLUS loan?
What additional steps must I take to receive my loan?
If you are eligible for a parent PLUS loan, you will be required to sign a Direct PLUS Loan Master Promissory Note (MPN), agreeing to the terms of the loan. Contact the financial aid office at the school your child is planning to attend for details regarding the process at that school.
If you’re taking out parent PLUS loans for more than one child, you’ll need to sign separate Direct PLUS Loan MPNs for the loans you receive for each child.
Other than interest, is there a charge for this loan?
Yes, there is a loan fee on all Direct PLUS Loans. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement.
How will I receive my loan?
The school will first apply parent PLUS loan funds to the student’s school account to pay for tuition, fees, room and board, and other school charges. If any loan funds remain, your child’s school will give them to you to help pay other education expenses for the student. With your authorization, the school can pay the remaining loan funds directly to the student. Get more information about receiving aid.
What happens after I receive my loan?
After you receive your parent PLUS loan, you will be contacted by your loan servicer (you will repay your loan to the loan servicer). Your loan servicer will provide regular updates on the status of your parent PLUS loan.
As a parent PLUS loan borrower, can I transfer responsibility for repaying the loan to my child?
No, a Direct PLUS Loan made to a parent cannot be transferred to the child. You, the parent borrower, are legally responsible for repaying the loan.
Can I cancel the loan if I decide that I don’t need it or if I need less than the amount offered?
Yes. Before your loan money is disbursed, you may cancel all or part of your loan at any time by notifying your child’s school. After your loan is disbursed, you may cancel all or part of the loan within certain time frames. Your promissory note and additional information you’ll receive from the school will explain the procedures and time frames for canceling your loan.