A Parent PLUS Loan is a federal student loan that parents of dependent undergraduate students can use to help pay for college. Unlike other federal loans, the parent is the borrower and is responsible for repayment, not the student. This loan can cover any remaining college costs after other financial aid is applied.
Parent PLUS Loans are offered through the U.S. Department of Education’s Direct Loan Program. They are credit-based, meaning your credit history will be reviewed. If you are a parent looking for extra funds to cover college expenses, this loan can be a helpful option.
How Does a Parent PLUS Loan Work?
You apply directly through the federal student aid website using your FSA ID. The school determines the maximum amount you can borrow, which is the cost of attendance minus any other financial aid the student receives.
The loan is disbursed directly to the school, and the school applies it to tuition, fees, room, and board. Any leftover funds are given to you or the student to pay for other educational expenses.
Eligibility Requirements
To qualify, you must be the biological or adoptive parent of a dependent undergraduate student enrolled at least half-time. You must also be a U.S. citizen or eligible noncitizen and have a satisfactory credit history.
If you have an adverse credit history, you may still be eligible if you obtain an endorser or document extenuating circumstances. The student must also meet general eligibility criteria, such as being enrolled in an eligible program.
Interest Rates and Fees
Interest rates for Parent PLUS Loans are set each year by Congress and are fixed for the life of the loan. For loans disbursed between July 1, 2025, and June 30, 2026, the interest rate is 7.54%.
There is also a loan fee, which is a percentage of the loan amount deducted from each disbursement. For the same period, the fee is 4.228%. These rates are higher than those for Direct Subsidized and Unsubsidized Loans.
| Loan Type | Interest Rate (2025-26) | Loan Fee |
|---|---|---|
| Parent PLUS Loan | 7.54% | 4.228% |
| Direct Subsidized/Unsubsidized (undergrad) | 6.53% | 1.057% |
| Direct Unsubsidized (graduate) | 8.08% | 1.057% |
These rates are fixed, so they won’t change over the life of the loan. This makes budgeting for repayment easier, but it also means you are locked into the rate at the time of borrowing.
Repayment Options
Parent PLUS Loans are eligible for several repayment plans, including the Standard, Graduated, and Extended plans. Income-driven repayment plans are also available, but only if you consolidate the loan into a Direct Consolidation Loan.
Repayment typically begins once the loan is fully disbursed, but you can request a deferment while the student is enrolled at least half-time. After the student leaves school, you’ll have a six-month grace period before payments are due.
Repayment Plans at a Glance
- Standard: Fixed payments for up to 10 years.
- Graduated: Payments start lower and increase every two years, over up to 10 years.
- Extended: Fixed or graduated payments over up to 25 years, for loans over $30,000.
- Income-Contingent Repayment (ICR): Available after consolidation; payments based on your income and family size.
Choosing the right plan depends on your financial situation. If you need lower monthly payments, an extended or income-driven plan might help, but you’ll pay more in interest over time.
Pros and Cons of Parent PLUS Loans
Parent PLUS Loans can fill gaps in college funding, but they have trade-offs. Here are some advantages and disadvantages to consider.
Pros include the ability to borrow up to the full cost of attendance, fixed interest rates, and potential eligibility for loan forgiveness programs. Cons include higher interest rates and fees compared to other federal loans, plus the parent’s responsibility for repayment.
Pros
- Can borrow up to the full cost of attendance minus other aid.
- Fixed interest rate provides predictable monthly payments.
- May be eligible for Public Service Loan Forgiveness if you work in qualifying public service.
- No prepayment penalty.
Cons
- Higher interest rate and fees than other federal student loans.
- Parent is legally responsible for repayment, even if the student cannot pay.
- No subsidized interest benefit; interest accrues from the first disbursement.
- Can affect your credit score if you miss payments.
How to Apply for a Parent PLUS Loan
To apply, the student must first complete the Free Application for Federal Student Aid (FAFSA). Then, you as the parent must complete a separate PLUS application on the federal student aid website.
You’ll need your FSA ID, your financial information, and the school’s name and location. The application includes a credit check, and you’ll need to sign a Master Promissory Note (MPN) agreeing to the loan terms.
Actionable Tips for Applying
- Apply early each year, as funds are limited at some schools.
- Check your credit report before applying to catch any errors.
- If denied, you can appeal or add an endorser to the loan.
- Borrow only what you need, not the maximum offered.
Frequently Asked Questions
Here are common questions parents ask about Parent PLUS Loans.
Can a Parent PLUS Loan be transferred to the student?
No, the loan cannot be transferred to the student. The parent is the borrower and remains responsible for repayment.
What is the maximum amount I can borrow with a Parent PLUS Loan?
You can borrow up to the cost of attendance minus any other financial aid the student receives. The school determines the exact amount.
Do I need a good credit score to get a Parent PLUS Loan?
You need a satisfactory credit history, not a specific credit score. A past bankruptcy, foreclosure, or default may affect eligibility.
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. Other forgiveness programs may apply after consolidation.
What happens if I default on a Parent PLUS Loan?
Defaulting can lead to wage garnishment, tax refund offset, and damage to your credit score. You may also lose eligibility for further federal aid.
Summary
Parent PLUS Loans are a federal option for parents to help pay for their child’s college education. They offer flexibility in borrowing but come with higher costs and responsibilities. Before applying, compare all financial aid options and consider your ability to repay. If you decide a Parent PLUS Loan is right for you, apply early and borrow only what is necessary.
Frequently Asked Questions
Can a Parent PLUS Loan be transferred to the student?
No, the loan cannot be transferred to the student. The parent is the borrower and remains responsible for repayment.
What is the maximum amount I can borrow with a Parent PLUS Loan?
You can borrow up to the cost of attendance minus any other financial aid the student receives. The school determines the exact amount.
Do I need a good credit score to get a Parent PLUS Loan?
You need a satisfactory credit history, not a specific credit score. A past bankruptcy, foreclosure, or default may affect eligibility.
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. Other forgiveness programs may apply after consolidation.
What happens if I default on a Parent PLUS Loan?
Defaulting can lead to wage garnishment, tax refund offset, and damage to your credit score. You may also lose eligibility for further federal aid.
