What is a parent PLUS loan?

Putting a child through college doesn’t come cheap. According to the Discover® Student Loans annual survey, parents who are worried about paying for college are concerned about rising tuition and inflation. And if you are like many of these parents, you may be wondering how you can contribute to your child’s education. Parent PLUS loans could help you bridge the financial gap.

What is a parent PLUS loan?

Along with other forms of financial aid, a parent PLUS Loan is one more resource families can consider when paying for college. A parent PLUS Loan (also known as a Direct PLUS Loan) is a type of unsubsidized federal student loan designed for parents of undergraduate students. Eligible parents can borrow enough to cover the cost of attendance at their child’s school (minus any other financial assistance they receive).

How do parent PLUS loans work?

To apply for a parent PLUS loan, your child must first fill out a Free Application for Federal Student Aid (also known as the FAFSA®). Completing the FAFSA is an important step in the process because it indicates whether you are eligible for a PLUS loan. If you are, you can complete and submit the PLUS loan application online, but the process can vary with some schools so check with your child’s school first.

During the application process, a credit check will be performed. If you are approved for the loan, you will have to sign a promissory note since the loan will be in your name and the funds will go directly to your child’s school. They’ll use that money to cover things like tuition, fees, and room and board. Any leftover funds will be disbursed directly to you (or your child if you specify).

Do parent PLUS loans have an origination fee?

Parent PLUS loans charge an origination fee, which is a percentage of the loan amount. This amount is automatically deducted from your loan before it’s disbursed—so the amount you receive will be less than the amount borrowed.

What is the interest rate on parent PLUS loans?

Parent PLUS loans have a fixed interest rate. Unlike a variable rate, a fixed rate stays the same for the life of the loan. Parent PLUS loan rates are set on an annual basis and are effective for the academic year, which runs from July 1 through June 30.

How is parent PLUS loan eligibility determined?

General eligibility requirements for federal student aid include having a valid Social Security number and being a US citizen. Here’s more information about how parent PLUS loan eligibility is determined:

• It’s only open to qualifying parents. You must be the biological or adoptive parent of a dependent undergraduate student. That may include stepparents in some cases.
• Your credit history is a factor. You must pass a credit check. If you don’t have an established credit or have less-than-perfect credit, you could add an endorser. Similar to a cosigner, this is someone who has a good credit history and agrees to repay your loan if you can’t.
• Your child must be an undergraduate student. Your child must be enrolled or accepted for enrollment at an eligible school at least half-time.

If you’re not eligible for a parent PLUS loan, your child might qualify for additional Direct Unsubsidized Loan funds.

When does parent PLUS loan repayment begin?

The repayment term begins once the loan is fully disbursed to your child’s school. If you’d rather wait until your child graduates (or drops below half-time enrollment) to make payments, you can request a deferment during the application process or through the loan servicer. Just keep in mind that interest will accrue and will be capitalized (added to your loan balance) when the deferment period ends, which adds to the cost of your loan. Making even small payments during school will reduce the amount you have to pay back.

How do I apply for a parent PLUS loan?

You can apply for a parent PLUS loan online. But, before you do, make sure to:

1. Have your child complete the FAFSA.
2. Contact your child’s school to determine if you need to complete a Direct PLUS loan application online or follow a school-specific process.

Once approved for the loan, reach out to your child’s school to see if there are any additional steps you need to take.

For more details about parent PLUS loans and other forms of federal student financial aid, visit StudentAid.gov.

^{FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.}