What is a Parent PLUS Loan?

Parent PLUS loans are much like regular college loans backed by the federal government, only they are taken out by the parent rather than the student, and can be obtained without regard to financial need, which is often a limitation to students getting financial loans on their own, who need the money to cover their college expenses. A parent can apply for a low-interest Parent PLUS loan in much the same way that a college student applies for financial aid through the FAFSA website application process. This loan application includes a promissory note, and will require that credit be checked before approval.

The credit check for a Parent PLUS loan is not too thorough nor does it have extremely difficult requirements. For the most part, it ensures the ability to repay and that there are no substantially negative indicators on the credit report such as bankruptcy.

1. How Much Can Be Borrowed?
   As much as is required for school and other expenses, minus any amounts you are receiving from other federal loans or scholarships.
2. What is the Interest Rate?
   For loans obtained after July 1, 2006, the interest rate is fixed at 7.90%.
3. How do We Get the Money?
   The money for a Federal PLUS loan is disbursed directly to the school. The school then takes out the tuition costs and any fees that are due and will arrange to either send any remainder by check or direct deposit to the student or the parent. The money must be spent on educational expenses.
4. How Much Will it Cost to Repay?
   You can use a loan payment calculator to determine what your payment amount will and what the terms for repayment will be.

The Parent PLUS loan, like regular educational loans, does not have to be repaid until the student either graduates from college, or drops below part-time status.