The Parent PLUS Loan

On: Nov 4, 2010 | By: | Categories: Financial Aid, Loans, PLUS Loans | Comments: 0

PLUS Student Loans for Parents

Plus Loan may be taken by the parents of dependent students to supplement the financial aid package of their children. Known as the Federal PLUS Loan, this type of Federal student loan enables the parents to borrow money and cover up any costs that are not covered under the student’s financial loan.

To apply, visit: Undergraduate Parent PLUS Loans

This loan may also be taken by graduate students.

For more details, visit: Graduate PLUS Loan Center from

Eligibility for the PLUS loan

First and foremost, to be eligible, the parents must apply and pass the process of a credit check.

If a relative is ready to endorse or guarantee to repay the loan in case parents fail to do so, a parent who did not qualified for the above criteria may also get the loan.

Based on the credit score, a graduate student may also get this loan.

Request PLUS Information Here »

What amount can one borrow with this loan program?

Annually one is eligible for an amount which equals to the cost of attendance minus the financial aid that the student is already receiving. That is: in case the child’s cost of attendance is $10,000 and child is already receiving $3,000 as financial aid, then under Plus Loan program the parents may borrow a sum up to $7,000.

How can one get this loan?

You need to fill in the PLUS application form available at your school, or from your lender or guaranty agency. The parent or graduate student who wishes to take the loan should submit the form duly filled in at the financial aid office of the student’s school.

It is important to remember that it is a credit-based loan. For the approval, it requires that you have average credit besides having a non-delinquent history.

When does one get the loan money?

The money will be disbursed in two installments. This money is first used to pay the child’s tuition fees and if an amount remains that may be retained by the parents and released in the child’s account as per the need.

Generally, parents are notified from the side of school as and when funds are credited. The lenders send the money directly to the school.

How can one cancel the loan?

Typically the school notifies you when they credit your account during loan proceedings.

This notice should be sent not earlier than 30 days before and not later than 30 days after the credit is made.

At that time, one may cancel the complete loan or a portion of it by informing the school. They need to inform the school within 14 days of the sending of notice. or by the first day of the payment as notified by the school, whichever is the later date.

What is the interest rate of this loan?

The interest rate of the Direct PLUS Loans is fixed at 7.9%.

Compare Alternative Loan Interest Rates »

Are some special fees also included?

Under the Federal Direct Loan Program (FDLP) and on new PLUS loans granted after 1 July, 2010, a 4% origination fees is charged for every loan. This is included in the loan repayment sum and one does not have to immediately pay for it after signing the Master Promissory Note.

The available repayment options

A repayment schedule is made and arranged by the lender. The time allowed to repay your loan is up to 10 years and a minimum of $50 per month should be paid.

Repayment of principal amount and interest begins 60 days after the loan is disbursed.

However, it is at the discretion of the parents to let the interest capitalize until their children finish their studies at school. It must be noted though that if the interest accrues from the date of disbursement, it is added to the loan balance through the capitalization process.

Consolidating your PLUS Loan should also be considered as a method to lower the monthly payment and get low rates. For graduate students, there is provision for deferring the payment as long as they are enrolled for at least half time in their schools.