Federal Direct Parent PLUS Loan

Quick Facts

• Interest rate: 9.08% fixed for loans first disbursed between July 1, 2024, and June 30, 2025.
• Loan fees: 4.228% origination fee deducted from each disbursement through September 30, 2025—plan to borrow slightly more to cover the fee.
• Repayment start: Begins 60 days after full disbursement, but parents may request in-school deferment while the student remains enrolled at least half time.
• Borrowing limit: Up to the remaining cost of attendance (tuition, room, board, books, transportation) minus scholarships, grants, and other federal loans.
• Credit flexibility: Parents with adverse credit history can still qualify by obtaining an endorser or documenting extenuating circumstances.

Program Overview

The Parent PLUS Loan fills the financing gap once grants, scholarships, work-study, and subsidized loans are exhausted. Funds are borrowed by the parent, not the student, so repayment responsibility stays with the borrower even if the student does not graduate. Schools use the Free Application for Federal Student Aid (FAFSA) data to calculate cost of attendance and package other aid, then certify the PLUS amount based on the family’s request. Because the loan has a relatively high interest rate and fee, parents should model repayment costs using the Department of Education’s Loan Simulator and compare them with private loan options before committing.

Eligibility Requirements

To qualify, you must:

1. Be a biological or adoptive parent (or eligible stepparent) of a dependent undergraduate attending an eligible school.
2. Ensure the student is enrolled at least half time in a degree or certificate program.
3. Complete the FAFSA each academic year, even though the loan is credit-based.
4. Pass a credit check showing no adverse history (charged-off accounts, 90-day delinquencies, foreclosures, bankruptcies within the last five years).
5. If adverse credit exists, secure an endorser without credit issues or submit a successful appeal explaining extenuating circumstances, then complete PLUS Credit Counseling.

Citizens and eligible noncitizens qualify; parents with certain immigration statuses may need to provide additional documentation. Students must meet general Title IV aid eligibility, including satisfactory academic progress.

Application Steps

1. Submit FAFSA: Ensure the student’s FAFSA is processed and the school has issued a financial aid offer.
2. Request the loan: Log into studentaid.gov with the parent FSA ID, navigate to “Apply for a Parent PLUS Loan,” and specify the academic year and amount (either a dollar figure or the maximum eligibility).
3. Undergo credit check: Results appear immediately. If approved, proceed to loan agreement. If denied, choose between using an endorser, appealing, or allowing the student to receive additional unsubsidized Direct Loan funds.
4. Complete Master Promissory Note (MPN): Sign the Parent PLUS MPN, which covers up to 10 years of borrowing at the same school.
5. Complete entrance counseling (if required): Some schools require PLUS Credit Counseling, especially after an adverse credit appeal.
6. Coordinate with the financial aid office: Schools schedule disbursements, typically once per term, and apply funds to the student account. Any credit balance is refunded to the parent unless you authorize release to the student.

Repayment Strategies

• Select a plan early: Standard repayment lasts 10 years, but you can choose Graduated, Extended, or Income-Contingent Repayment (after consolidating into a Direct Consolidation Loan). Evaluate monthly costs before repayment begins.
• Automate payments: Enroll in auto-debit to earn a 0.25% interest rate reduction and avoid missed payments.
• Refinance cautiously: Private refinancing may lower rates but removes federal protections such as deferment, forbearance, and income-driven options.
• Consider double consolidation for SAVE plan: Parents pursuing Public Service Loan Forgiveness (PSLF) can consolidate twice to access the SAVE income-driven plan; consult a student loan advisor because rules are technical.

Tips to Minimize Borrowing

• Request only what you need each term; you can increase later if expenses rise.
• Ask the financial aid office about tuition payment plans, institutional grants, or appeal processes that might reduce the PLUS amount.
• Encourage the student to maximize work-study or summer earnings to cover personal expenses, reducing reliance on parent debt.
• Compare private education loans. Some offer competitive rates for borrowers with strong credit, though they lack federal safety nets.

By understanding the application steps, repayment options, and risk mitigations, parents can use PLUS loans strategically to fill remaining college costs without jeopardizing long-term financial goals.