Parent PLUS Loans are a federal loan program designed to help parents of dependent college students finance their child’s education. These loans are a valuable resource for families facing financial challenges or aiming to invest in quality education. Here’s a comprehensive guide to eligibility, interest rates, and the application process to help you make an informed decision.
Parent PLUS Loans
Parent PLUS Loans, part of the Direct PLUS Loan program, allow parents to borrow funds to cover the cost of their child’s college education. These loans can be used for tuition, fees, room and board, and other education-related expenses not covered by financial aid.
Eligibility Criteria
To qualify for a Parent PLUS Loan, you must meet the following requirements:
1. Parental Relationship
- You must be the biological, adoptive parent, or a stepparent of a dependent student enrolled at least half-time in an eligible school.
- Grandparents and legal guardians are not eligible unless they have formally adopted the student.
2. Credit History
- You must not have an adverse credit history (e.g., recent bankruptcy or loan default).
- If you have an adverse credit history, you may still qualify by meeting additional requirements, such as obtaining an endorser or demonstrating extenuating circumstances.
3. Federal Aid Eligibility
- You must meet the general eligibility criteria for federal student aid, including citizenship or eligible non-citizenship and a valid Social Security number.
Interest Rates and Fees
Parent PLUS Loans have fixed interest rates and fees. For loans disbursed between July 1, 2024, and July 1, 2025, the terms are:
| Term | Details |
|---|---|
| Interest Rate | 9.08% (fixed) |
| Origination Fee | 4.228% for disbursements on/after Oct 1, 2020 |
These rates may change for future disbursements. Be sure to confirm current rates before applying.
How to Apply
Applying for a Parent PLUS Loan typically involves an online process, but some schools may have their own procedures. Here’s how to proceed:
Step 1
- Visit the Federal Student Aid website to verify if your child’s school participates in the Direct Loan Program.
- Check with the school’s financial aid office for any additional application instructions.
Step 2
- Log in to the Federal Student Aid website using your FSA ID.
- Select the Parent PLUS Loan application and fill in the required information.
- Indicate the loan amount you wish to borrow.
Step 3
- The MPN is a legal document where you agree to the loan terms and repayment conditions.
- If applying for loans for multiple children, a separate MPN is required for each.
Step 4
- Once approved, the loan amount is disbursed directly to your child’s school to cover tuition and other expenses. Any remaining funds are sent to you for additional education-related costs.
Key Considerations
- Non-Transferable Responsibility
- Parent PLUS Loans remain the parent’s responsibility and cannot be transferred to the child.
- Repayment starts immediately after disbursement unless you request deferment.
- Cancellation
- You can cancel the loan before the funds are disbursed. Contact your child’s school’s financial aid office for cancellation procedures.
- Repayment Plans
- Repayment plans include options such as Standard Repayment, Graduated Repayment, and Income-Contingent Repayment (after consolidation). Look into these options to choose the one that best fits your financial situation.
FAQs
Who is eligible for a Parent PLUS Loan?
Biological, adoptive, or stepparents of a dependent student enrolled at least half-time.
What is the interest rate for Parent PLUS Loans in 2024-2025?
The fixed interest rate is 9.08%.
Can I cancel a Parent PLUS Loan?
Yes, before the loan funds are disbursed.
Can grandparents apply for a Parent PLUS Loan?
No, unless they have legally adopted the student.
Do I need to apply separately for each child?
Yes, a separate application and MPN are required for each child.
