Parent Loan for Undergraduate Students (PLUS)
The federally-sponsored Direct Parent Loan for Undergraduate Students (Direct PLUS) is a low-interest education loan for parents of undergraduate dependent students. PLUS lets parents fund the entire cost of the student's education (less student financial aid).
- The interest rate is fixed and charged during all periods. 2020/2021 is 5.30%;
- Loan origination fee 4.228% for 2020/2021.
This fee helps reduce the cost of making these low-interest loans. The U.S Department of Education will deduct the fee before you receive any loan money, so the loan amount you actually receive will be less than the amount you have to repay.
- Repayment begins sixty days after disbursement with an option to defer repayment until six months after the student ceases to be enrolled at least half-time.
- PLUS loans are not based on income or assets.
- PLUS borrowers do not need collateral.
- PLUS loan interest may be tax-deductible.
- Parents may take up to 10 years to repay the loan.
- There is no pre-payment penalty.
- Your child must be a dependent student who is enrolled at least half-time.
- In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs.
- Parent PLUS loan borrowers cannot have an adverse credit history (a credit check will be done).
- If you are found to have an adverse credit history, you may still borrow a PLUS Loan if you get an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay the loan.
- Dependent students whose parents have applied for but were unable to get a PLUS Loan are eligible to be considered for additional Direct Unsubsidized Loan funds.
You may not borrow more than the cost of your child's education minus any other financial aid received. The loan is for education expenses only and you can use the loan money you receive only to pay for your child's education expenses at the school that is giving you the loan. Education expenses include school charges such as tuition, fees, books, supplies and transportation. Federal regulations do not allow loans for outstanding debt that is associated with an academic period that has already ended.
Generally, your loan will cover a full academic year and the college will make at least two disbursements to you. If awarded the loan for the full year, payment will usually be made at the mid-point of the fall and spring semesters. If awarded the loan for one semester only, the college will disburse one-half of the loan around the mid-point of the semester and the second half of the loan about one month later. Outstanding tuition and fees for the semester will be deducted from the loan disbursement and the balance will be paid to the parent borrower.
- If awarded a PLUS loan, the parent will need to complete a PLUS Master Promissory Note (MPN) if the parent is a first-time Direct PLUS borrower. Parents can access the MPN here.