Yes, the Parent PLUS Loan is a federal loan. It is part of the U.S. Department of Education’s Direct Loan Program. Parents of dependent undergraduate students can borrow this loan to help pay for college costs not covered by other financial aid.
Unlike other federal student loans, the Parent PLUS Loan is taken out by the parent, not the student. The parent is fully responsible for repayment. This loan has a higher interest rate than most other federal loans and requires a credit check.
In this article, you will learn how Parent PLUS Loans work, who qualifies, what they cost, and how to repay them. You will also see how they compare to other federal loans and private loans.
What is a Parent PLUS Loan?
The Parent PLUS Loan is a federal loan made to parents of dependent undergraduate students. The U.S. Department of Education is the lender. The school determines the loan amount based on the cost of attendance minus other financial aid.
Parents can borrow up to the full cost of attendance, which includes tuition, fees, room and board, books, and other education-related expenses. However, the loan cannot exceed the cost of attendance minus any other aid the student receives.
This loan is not subsidized. That means interest begins accruing as soon as the loan is disbursed. The parent is responsible for all interest that builds up, even while the student is in school.
How Does the Parent PLUS Loan Compare to Other Federal Loans?
Parent PLUS Loans are federal loans, but they differ from Direct Subsidized and Unsubsidized Loans in several ways. The table below highlights key differences.
| Feature | Parent PLUS Loan | Direct Subsidized Loan | Direct Unsubsidized Loan |
|---|---|---|---|
| Borrower | Parent of dependent student | Student (undergraduate) | Student (undergraduate or graduate) |
| Credit check required | Yes | No | No |
| Interest subsidy while in school | No | Yes (if eligible) | No |
| Borrowing limit | Up to cost of attendance | Set annual limits | Set annual limits |
| Interest rate (2025-2026) | Fixed (set each July) | Fixed (set each July) | Fixed (set each July) |
Parent PLUS Loans have a higher interest rate than Direct Subsidized and Unsubsidized Loans. For the 2025-2026 school year, the Parent PLUS rate is 9.08%, while undergraduate Direct Loans are 6.53%. These rates are fixed for the life of the loan.
Parent PLUS Loans also charge a loan fee, which is a percentage of the loan amount. This fee is deducted from the loan disbursement before it is sent to the school.
Who Can Get a Parent PLUS Loan?
To qualify for a Parent PLUS Loan, you must meet a few basic requirements. The student must be a dependent undergraduate student enrolled at least half-time at an eligible school. You must be the student’s biological or adoptive parent, or in some cases, a stepparent.
You must be a U.S. citizen or eligible noncitizen. You must not have an adverse credit history. The Department of Education will check your credit. If you have a bankruptcy discharge, foreclosure, repossession, or a debt in collections within the last five years, you may be denied.
If you are denied, the student may be able to receive additional Direct Unsubsidized Loan funds. You can also get an endorser (a co-signer) who meets the credit requirements. The endorser must sign a separate agreement.
How to Apply for a Parent PLUS Loan
To apply, the parent must complete the Free Application for Federal Student Aid (FAFSA). Then, the parent must complete a PLUS Loan application on the Federal Student Aid website. The school must be listed on the FAFSA.
After approval, the parent signs a Master Promissory Note (MPN). This is a legal document agreeing to repay the loan. The MPN is valid for up to 10 years, so you may not need to sign a new one each year.
You will also need to complete entrance counseling if you are a first-time borrower. This counseling explains your rights and responsibilities as a borrower.
What Are the Repayment Options for Parent PLUS Loans?
Parent PLUS Loans are eligible for several repayment plans. The standard plan has a 10-year term. However, you can choose an extended plan with a 25-year term if you owe more than a certain amount.
You can also choose an income-contingent repayment plan. This plan bases your monthly payment on your income and family size. To qualify, you must consolidate your Parent PLUS Loan into a Direct Consolidation Loan.
Public Service Loan Forgiveness (PSLF) is available if you work full-time for a qualifying employer, such as a government agency or nonprofit. To get PSLF, you must make 120 qualifying payments under an income-driven repayment plan while working for a qualifying employer.
Here are some key facts about repayment:
- Payments usually begin within 60 days after the loan is fully disbursed.
- You can request a deferment while the student is in school at least half-time, plus a 6-month grace period after the student leaves school.
- You can request forbearance to temporarily stop or reduce payments, but interest continues to accrue.
- Parent PLUS Loans are not eligible for income-driven repayment plans directly, but they can become eligible after consolidation.
How Does a Parent PLUS Loan Affect Financial Aid?
Parent PLUS Loans do not reduce a student’s eligibility for other federal aid. The loan is based on the cost of attendance. The school will determine the maximum loan amount after subtracting any other aid.
However, taking a Parent PLUS Loan can reduce the amount of need-based aid a student may receive. That is because the loan is considered a resource. The school will adjust the aid package accordingly.
If you are denied a Parent PLUS Loan, the student may become eligible for additional Direct Unsubsidized Loan funds. The amount depends on the student’s class level and dependency status.
What Are the Alternatives to Parent PLUS Loans?
If you are considering a Parent PLUS Loan, you may also want to explore other options. Private student loans are available from banks and credit unions, but they often have variable interest rates and fewer borrower protections.
You can also encourage the student to apply for scholarships and grants. These do not need to be repaid. The student can also work part-time to reduce borrowing.
Another option is to have the student take out federal Direct Unsubsidized Loans up to the annual limit. After that, the parent can cover the gap with a Parent PLUS Loan or other means.
Summary
The Parent PLUS Loan is a federal loan that helps parents pay for their dependent child’s college education. It has a higher interest rate than other federal loans, requires a credit check, and charges a loan fee. Parents can borrow up to the full cost of attendance, but they must repay the loan themselves. Repayment options include standard, extended, and income-contingent plans (after consolidation). Always consider all federal aid options first, and borrow only what you truly need.
Frequently Asked Questions
Is the parent PLUS loan a federal loan?
Yes, the Parent PLUS Loan is a federal loan made by the U.S. Department of Education to parents of dependent undergraduate students.
Do I need good credit to get a parent PLUS loan?
Yes, you must not have an adverse credit history. A bankruptcy, foreclosure, or a debt in collections within the last five years can disqualify you.
Can a parent PLUS loan be forgiven?
Yes, under Public Service Loan Forgiveness if you work full-time for a qualifying employer and make 120 qualifying payments under an income-driven repayment plan after consolidating.
What is the interest rate for a parent PLUS loan in 2026?
For the 2025-2026 school year, the fixed interest rate is 9.08%. Rates are set each July for new loans.
Can I transfer a parent PLUS loan to my child?
No, you cannot transfer a Parent PLUS Loan to your child. The parent is the borrower and is legally responsible for repayment.
