PLUS Loans - Student Loans for Parents

In order to qualify for a PLUS Loan, the child must be a dependent undergraduate student enrolled at least half time in an approved college or university. The primary features of a PlUS loan include:

• Parents of students can borrow federally guaranteed low interest loans to help pay for their child's education
.

• PLUS Loans allows parents to borrow the total cost of an undergraduate education including tuition, room and board expenses, supplies, lab fees minus any of other aid received by the student
.

• Plus loans are not-need based. Eligibility depends on a credit check to determines whether the parent is an adverse credit risk. Learn more about credit here.


• Some schools may require completion of a FAFSA application. Check with your school's financial aid office for more information.


• Unlike some other loans, Parent PLUS Loans do not require collateral
.

• The interest on a PLUS loan may be tax deductible.

The yearly limit on a PLUS Loan is equal to your cost of attendance as determined by the university or college, minus any other financial aid received. For instance, if your cost of attendance is $8,000 and you receive $6,000 in financial aid, your parents could borrow up to, but no more than, $2,000.

Depending upon whether the loan is secured or unsecured, either the U.S. Department of Education (for a Direct PLUS Loan) or your parents' lender (for a FFEL PLUS Loan), will send the PLUS funds to your school. The school may require parents to endorse and return the disbursement check. In many cases, the loan will be disbursed in at least two installments. PLUS funds will be applied in the following order: tuition, fees, room and board, then other school charges. If, after disbursement, there are funds left over, your parents can:

• receive the amount as a check or in cash or;


• authorize the amount to be released to you or;


• have the funds remain in your school account for future educational expenses

In cases where parents may change their minds about receiving a PLUS loan, even after signing the promissory note, they may cancel all or part of the loan by informing the school within 14 days of receiving the notification by the school of the funds being received. If the funds are sent directly to the parents in the form of a check, they may refuse the funds by not endorsing the check.
 

Parent who receive PLUS loans should also consider PLUS Loan Consolidation as a way of lowering their monthly payment. Learn more about student loan consolidation here. Also consider Stafford Loans, private student loans, and continue to search for College Scholarships.

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