What is a Parent PLUS Loan?

A Parent PLUS Loan to meet students' education costs is available through both the FFEL and Direct Stafford Program. Parents who have an acceptable credit history can borrow a Parent PLUS Loan to pay the education expenses of a child who is a dependent student enrolled at least half time in an eligible program at an eligible school.

Your parents fill out a Parent PLUS Loan application, which is available from your school's financial aid office.

To be eligible to receive a Parent PLUS Loan, your parents generally will be required to pass a credit check. A parent cannot be turned down for having no credit history -- only for having an adverse one. If your parents don't pass the credit check, they may still be able to receive a PLUS if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan. An endorser promises to make payments if your parents fail to do so. Your parents may also qualify without passing the credit check if they can demonstrate that extenuating circumstances exist. You and your parents must also meet other general eligibility requirements for federal student financial aid.

Answer

A parent PLUS is a loan that a parent of a full or part time undergraduate student takes out to assist the student is paying for college. This loan is the parent's not the student's and is subject to credit check like the answer above explained.

The borrowing limits for PLUS loans is the cost of attendance minus any aid the student will receive. There is no aggregate limit, meaning a parent can borrow as much as is needed to pay for the student's college education. Interest rates are adjusted every year on July 1st with a cap of 9%.

There are commonly three repayment options with PLUS loans including a level payment plan (monthly interest and principal), an interest only plan (pay only the interest while student is in school), and a monthly payment plan based on percentage of income. You choose the plan.

PLUS loans have a 10 year term. Loans can be paid off sooner and there is NO prepayment penalty. Repayment begins within 60 days of the loan being fully disbursed for the acedemic year.

PLUS loans are eligible for consolidation, but it is important to note that a parent cannot consolidate their children's student loan with their PLUS loan and vice versa.

PLUS loans are also eligible for deferments and forbearances. PLUS loans are unsubsidized, which means that the borrower is responsible for the interest that accrues during the deferment period. Any interest paid is tax deductible for taxpayers making less than $50K per year.

For more answers, contact the Federal Student Aid Information Center at 1-800-433-3243 (800-4-FED-AID).

First answer by anonymous. Last edit by ID2525186948. Question popularity: 220 [recommend question]