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Emma Woodward is a contributor for Bankrate and a freelance writer who loves writing to demystify personal finance topics. She has written for companies and publications like Finch, Toast, JBD Clothiers and The Financial Diet.
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Searching for ways to help your child pay for college? The parent PLUS loan is a student loan from the U.S. Department of Education designed for qualifying parents of undergraduate students. The borrower can use the loan to pay for any eligible educational expenses not covered by other sources of financial aid. If you need financial help, the Parent PLUS loan could be a worthwhile solution — as long as you understand the parent PLUS loan interest rate and the true cost of the loan over time.
When determining the right way to finance your child’s college education, you have several options. Parent PLUS loans can be great because they have benefits specific to the federal government and may be cheaper than some private loans. However, there are questions to consider before applying:
A parent PLUS loan is not ideal for everyone: if you cannot repay the loan, it can have harsh financial penalties including wage garnishment.
There is no maximum amount of money that can be taken out under the parent PLUS loan program, meaning it is possible to over-borrow. These loans are also not eligible for income-based repayment plans. If you live on a fixed income or already have other debt obligations, avoid parent PLUS loans if possible.
When filling out the parent PLUS loan application, it is the parent who applies and is responsible for its repayment, not the student. Parents can apply for this type of loan through the Department of Education.
Here are the steps to apply for a parent PLUS loan:
Before you (the borrower) can qualify for a parent PLUS loan, you must meet three requirements:
Though the parent will apply for the parent PLUS loan, the student must fill out the Free Application for Federal Student Aid (FAFSA) form first. Then your school can direct you on how to proceed with the Direct PLUS Loan application. Remember: No FAFSA, no parent PLUS loan.
You can borrow the total amount of attendance costs for your child, minus any financial assistance or scholarships received. This includes tuition, fees, room and board, books, supplies, transportation and loan fees. Miscellaneous expenses, including a personal computer, child care, study abroad costs and disability-related expenses, may also be eligible. The total amount varies by school.
Note that you can always borrow more in the future; only borrow what you need.
Applications for parent PLUS loans can be completed online at the Department of Education’s website. The information you enter will be sent to your child’s school, and the school will determine if you qualify for a parent PLUS loan. The application process typically takes about 20 minutes to complete.
Before you begin the online parent PLUS application process, have this information available:
Before you receive your loan, you will be required to sign the Master Promissory Note. This is a legal document. When you sign it, you agree to all of the loan’s terms.
Though you will have to apply for a new parent PLUS loan each year, it’s possible to receive more than one loan under the Master Promissory Note you sign. In some cases, they are good for up to 10 years.
If you receive a parent PLUS loan, repayment begins after funds are disbursed to your child’s school. Repayment for a parent PLUS loan is not automatically deferred while your child is in school, but you can submit a separate application asking for a deferment while your child is enrolled at least half time at an eligible school and for six months afterward.
If you need to refinance your parent PLUS loan, you can apply for a private student loan. When you refinance, you can keep the loan in your name or, in some cases, transfer the loan to your child.
Before applying for a parent PLUS loan, get your paperwork in order. This includes your Federal Student Aid ID, your student’s information, your income and employer information and any documents you used to complete the FAFSA. You should also run the numbers with a student loan calculator to determine how much you need to borrow.
The deadline for parent PLUS loan applications varies by institution. The federal deadline for the FAFSA is June 30 of each award year, but many institutions have earlier deadlines. Check with your child’s school to see when the deadline for completing a parent PLUS loan is.
It is possible to get denied for a parent PLUS loan if you’ve struggled with credit in the past. Since there’s a credit check on PLUS Loans, you’ll want to check your credit first to see if anything is holding you back before getting approved. If you have any old debt that needs to be repaid or bad marks that need to get removed, take care of that before completing your application. An adverse credit history could mean your application gets denied, and you’ll need to look elsewhere for additional funding.
Parent PLUS loans allow parents to help pay for their child’s tuition by taking out a loan through the federal government, often with better rates than private loans. However, these loans are not eligible for income-based repayment plans and are typically not eligible for forgiveness plans, so they are not ideal for all borrowers.
Arrow Right Contributor, Personal Finance
Emma Woodward is a contributor for Bankrate and a freelance writer who loves writing to demystify personal finance topics. She has written for companies and publications like Finch, Toast, JBD Clothiers and The Financial Diet.
Aylea Wilkins has been at Bankrate since 2019, editing content in student, personal and home equity loans and auto, home and life insurance before taking on editing content in a variety of other categories. She has nearly a decade of editorial experience with a primary focus on helping people confidently make financial and purchasing decisions by providing clear and unbiased information.
