Parent Loan for Undergraduate Student (PLUS)
As it’s name indicates, this loan is offered to the parent or stepparent of a dependent undergraduate student. It is usually the last loan offered on the financial aid award letter. The PLUS's purpose is to bridge the gap between the amount of financial aid the college has been able to offer the student and the cost of attending college for the year ("Cost of Attendance"). You must be enrolled in college as a half-time student or more for your parent to borrow using a PLUS loan.
A PLUS loan borrower must be a U.S. citizen or eligible non-citizen, and the student for which the loan funds are disbursed must be eligible to receive federal funding. The borrower must not be in default on his or her own federal student loans borrowed while in college and must have a good credit history. The lender will do a credit check to determine your parent's or stepparent’s eligibility to borrow using a PLUS loan. When a PLUS loan is accepted, signing the Master Promissory Note (MPN) is your parent's promise to repay the loan.
The interest on a PLUS loan disbursed on or after July 1, 2006 is a fixed rate of 7.9 percent for money borrowed under the Direct Loan Program and 8.5 percent for money borrowed under the Federal Family Loan (FFEL) Program. Click here to see what the interest rates are for loans disbursed prior to July 1, 2006. Scheduled payments will be at least $50 per month and begin immediately after the PLUS funds are fully disbursed. Your parent normally has up to 10 years to repay these loans, however there are repayment plans that may give your parent additional time depending upon the amount borrowed. Remember however, the more time taken to repay the loan the more interest your parent will end up paying.
There is no maximum amount a parent can borrow each year except that the amount cannot exceed the cost of attendance (COA) minus any financial aid awarded to the student. We encourage parents and stepparents to be wise borrowers and only borrow what is actually needed to pay their student's educational expenses. Your parents may be able to borrow money for college by using other types of loans, using equity in the family’s home or some other asset. Check with your bank and compare the terms of home equity and other types of loans to PLUS loan terms to find the loan that is most beneficial.
If your parent or stepparent is ineligible to borrow using a PLUS loan, you may be able to borrow an additional money through a Federal Stafford Loan, but it will be an unsubsidized loan. Check with your college to determine your eligibility.
No matter which loan(s) you decide to accept, be a wise borrower and only borrow what you need to pay for your educational expenses each year. The SLOPE Calculator and the Loan Repayment Guide can help you determine this amount.
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