Parent PLUS Loans
An Overview of Parent PLUS Loans
The Parent PLUS loan program is a federal loan program that
allows your parents to borrow up to the cost of attendance
(COA) for your college education. The Parent PLUS loan is
only available to parents with children pursuing
undergraduate studies. For graduate students, there are
PLUS loans for graduate and professional students.
FFELP vs. Direct
As with Stafford Student loans,
PLUS loans are administered through the FFELP and
Direct Loans programs. Each college decides which program
it wants to use for its students and their parents.
Most colleges participate in one program or the other,
but some actually participate in both.
Under the FFELP program, your parent will get their
PLUS loan from a lender (like Discover Student Loans,
Sallie Mae, or CitiBank). In this situation, your parent
needs to make a decision about which lender is the best
option. Colleges will often present you and your parents
with a Lender List containing information about the Parent
PLUS loans offered by various lenders. Your parents have
the option of picking a lender off this Lender List or
going with another lender that they may have uncovered
in their research.
PLUS Loan Limits
PLUS loan limits are fairly generous. You can borrow
up to the cost of attendance minus any other financial
aid you are receiving. To give an example, if school
costs $10,000 and you won $2,000 in scholarships and
have a $3,500 Stafford loan, you could borrow up to
$4,500 through the Parent PLUS loan program ($10,000
- $2,000 - $3,500 = $4,500).
PLUS Interest Rates
The interest rate on Parent PLUS loans is fixed.
If your school uses the Direct Loans program, the
interest rate is 7.90%. For FFELP schools, the rate
Upfront Fees on Parent PLUS Loans
Parent PLUS loans may have an origination and a
federal default fee. The origination fee can be up to
3% and is used by a lender to cover administrative costs.
The federal default fee can be up to 1% and is intended to
fund services to help student-loan borrowers who experience
difficulty making their payments so they can avoid some of
the expense and consequences of defaulting on their loans.
Both fees are deducted from the principal, meaning the amount
you borrow and the amount you actually receive will be
different. Some lenders may cover all or a portion of these
fees. Zero-fee loans are ones where the student does not have
to pay either an origination or default fee.
Repayment of Parent PLUS Loans
The first payment for a Parent PLUS loan is generally
due within 60 days of full disbursement of the loan. Unlike
there are no grace periods for Parent PLUS loans and interest
begins to accumulate once the first disbursement has been
made. In other words, your parents will be paying this loan
back while you are in school. If they don't start paying it
back after 60 days, the interest will start to capitalize,
making the loan more expensive.
Applying for a Parent PLUS Loans
Your parents will need to complete a PLUS loan application
and sign a master promissory note. Unlike
completing the FAFSA
is not needed to apply. However, your parents will need
to pass a modest credit check for approval.
Find a Parent PLUS Loan
You can use our Student Loan Marketplace to
find and compare college loans!