Understanding the Parent PLUS Loan: A Guide for Parents

One financial aid option available to parents is the Parent PLUS Loan, a federal loan that can help cover the cost of higher education for their dependent undergraduate children. Let's delve into what the Parent PLUS Loan is and how it can benefit both parents and students.

What is a Parent PLUS Loan?

The Parent PLUS Loan is a federal loan program that allows parents of dependent undergraduate students to borrow money to help pay for their child's education. Unlike other federal student loans, which are taken out in the student's name, the Parent PLUS Loan is taken out in the parent's name.

Key Features of the Parent PLUS Loan:

Credit Check: Unlike other federal student loans, the Parent PLUS Loan requires a credit check.

Loan Limits: Parents can apply to borrow up to the total cost of attendance, minus any other financial aid received by the student.

Interest Rates: The interest rate on Parent PLUS Loans is fixed for the life of the loan. The interest ratee for Parent PLUS Loans first disbursed on or after July 1, 2023, and before July 1, 2024 is 8.05%.

Repayment Options: Parents can choose from several repayment plans, including standard repayment, extended repayment, and graduated repayment. They can also consolidate their Parent PLUS Loans to qualify for income-contingent repayment or income-based repayment.

Parent Borrower Responsibilities: Since the loan is in the parent's name, the parent is responsible for repaying the loan, not the student. Parents should carefully consider their ability to repay the loan before borrowing.

How to Apply for a Parent PLUS Loan:

To apply for a Parent PLUS Loan, students must complete the Free Application for Federal Student Aid (FAFSA). After, the parent applies for the Parent PLUS Loan on the StudentLoans.gov website. They will need to undergo a credit check as part of the application process.

For more information about the Parent PLUS Loan, click here.