The federal parent PLUS loan is a type of federal student loan that parents of dependent undergraduate students can use to help pay for college. Unlike other federal loans, this one is taken out by the parent, not the student. The U.S. Department of Education is the lender, and the loan must be repaid with interest.
Parent PLUS loans are designed to cover the “gap” between other financial aid and the full cost of attendance. They are not based on financial need, but they do require a credit check. If you are a parent considering this loan, it is important to understand how it works before you borrow.
How Does the Parent PLUS Loan Work?
The parent PLUS loan is part of the federal Direct Loan Program. The parent borrows money directly from the U.S. Department of Education. The funds are sent to the college or university to pay for tuition, fees, room, board, and other educational expenses.
To qualify, the student must be enrolled at least half-time at a school that participates in the federal student aid program. The student must also be under 24 years old, unmarried, and not have dependents of their own (in most cases).
The loan is the parent’s responsibility. Even if the parent and student have an informal agreement, the parent is legally obligated to repay the loan.
Who Is Eligible for a Parent PLUS Loan?
To be eligible, you must be the biological or adoptive parent of a dependent undergraduate student. In some cases, a stepparent may also be eligible if the parent’s income is included on the Free Application for Federal Student Aid (FAFSA).
You must also meet these basic requirements:
- Be a U.S. citizen or eligible noncitizen
- Not be in default on any federal student loan
- Not owe an overpayment on a federal grant
- Pass a credit check (no adverse credit history)
If you have an adverse credit history, you may still qualify by getting an endorser (a co-signer) or by documenting extenuating circumstances. Otherwise, the loan will be denied.
Interest Rates and Fees for Parent PLUS Loans
The interest rate for parent PLUS loans is set by Congress each year. For loans first disbursed on or after July 1, 2026, and before July 1, 2027, the interest rate is 7.54%. This rate is fixed for the life of the loan.
There is also a loan fee, which is a percentage of the loan amount. The fee is deducted from each disbursement. For loans disbursed on or after October 1, 2020, and before October 1, 2026, the fee is 4.228%. However, the fee may change for future disbursements, so always check the official Federal Student Aid website.
Because the interest rate and fees are higher than those for Direct Subsidized and Unsubsidized Loans, parent PLUS loans are generally more expensive. Compare all options before borrowing.
How to Apply for a Parent PLUS Loan
The application process is straightforward. The student must first complete the FAFSA to determine eligibility for other aid. Then, the parent must complete a separate PLUS Loan application.
Here are the steps:
- Log in to the Federal Student Aid website with your FSA ID.
- Complete the PLUS Loan application, including the loan amount and the school’s name.
- Sign the Master Promissory Note (MPN) agreeing to repay the loan.
- Complete entrance counseling (if required by the school).
- Wait for the school to certify the loan amount.
The school will notify you of the loan’s approval and disbursement dates. Funds are typically sent directly to the school, and any leftover amount is given to you or the student (with your permission).
Repayment Options for Parent PLUS Loans
Repayment begins after the loan is fully disbursed, but you can request a deferment while the student is enrolled at least half-time and for six months after the student graduates, leaves school, or drops below half-time. During deferment, interest accrues and is capitalized (added to the principal).
Standard repayment is a fixed monthly payment over 10 years. However, you may choose other repayment plans, including income-contingent repayment (ICR) if you consolidate the loan into a Direct Consolidation Loan. ICR bases your monthly payment on your income and family size.
Here is a comparison of repayment plans:
| Repayment Plan | Monthly Payment | Repayment Term |
|---|---|---|
| Standard | Fixed amount | Up to 10 years |
| Graduated | Starts low, increases every 2 years | Up to 10 years |
| Extended | Fixed or graduated | Up to 25 years (if over $30,000 in debt) |
| Income-Contingent (after consolidation) | Based on income | Up to 25 years |
If you choose an extended or income-driven plan, you will pay more in interest over time. But the monthly payment will be lower.
Pros and Cons of Parent PLUS Loans
Before taking out a parent PLUS loan, weigh the advantages and disadvantages.
Pros: You can borrow up to the full cost of attendance minus other aid. The interest rate is fixed, and there is no prepayment penalty. You may be able to get a deferment while the student is in school.
Cons: The interest rate and fees are higher than other federal loans. The loan cannot be transferred to the student. You must pass a credit check. If you default, the government can garnish your wages and tax refunds.
Alternatives to Parent PLUS Loans
Consider other options before borrowing a parent PLUS loan. The student may qualify for Direct Subsidized or Unsubsidized Loans, which have lower interest rates and no credit check. Grants and scholarships are also worth pursuing because they do not need to be repaid.
If you still need additional funds, you might look into private student loans, but those often have variable rates and fewer borrower protections. Compare all offers carefully.
How to Manage Parent PLUS Loan Debt
If you do take out a parent PLUS loan, plan ahead to manage the debt. Set up automatic payments to avoid late fees and possibly get a small interest rate reduction (usually 0.25%). Pay more than the minimum when possible to reduce interest.
If you struggle to make payments, contact your loan servicer immediately. You may qualify for a deferment, forbearance, or an income-driven repayment plan after consolidation. Never ignore the loan, as default has serious consequences.
In summary, the federal parent PLUS loan can be a helpful tool to pay for your child’s education, but it comes with higher costs and risks. Understand the terms, compare alternatives, and borrow only what you truly need. Always keep communication open with your student about repayment expectations, and make a plan to stay on top of the debt.
Frequently Asked Questions
Can a parent PLUS loan be transferred to the student?
No, a parent PLUS loan cannot be transferred to the student; the parent remains legally responsible for repayment.
What credit score is needed for a parent PLUS loan?
There is no minimum credit score, but you must not have an adverse credit history, which includes bankruptcy, foreclosure, or default on any federal loan.
Can a parent PLUS loan be forgiven?
Parent PLUS loans are not eligible for most income-driven repayment forgiveness unless you consolidate them and enroll in income-contingent repayment; Public Service Loan Forgiveness may also be possible if you work for a qualifying employer.
How long does it take to get a parent PLUS loan?
The application process can take a few days to a few weeks, depending on the school’s certification and your credit check.
What happens if a parent PLUS loan is denied?
If denied, you can appeal the decision, add an endorser, or the student may become eligible for additional unsubsidized federal loans.
