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An Overview of Parent PLUS Loans

What Are Parent PLUS Loans?

The Parent PLUS Loan by definition is a type of loan that can be used by parents to help their children with the cost of college. This type of loan has become very popular in recent years due to the increasing number of families who are looking to help their children with their education expenses. In this article, we will talk about the mechanics of parent PLUS loans and provide a guide on how to apply for one.   

Many parents will opt to borrow a Federal Direct Parent PLUS loan to help cover the cost of their child’s education. But what actually is a parent plus loan? It’s a new type of student loan, designed by the federal government for parents to help pay for their children’s college expenses. These loans are designed to cover the gap between other sources of financial aid, such as federal grants and scholarships, and what it costs your child to attend a university.

They have a lower interest rate than other types, and also a longer repayment period, which is from 10 to 25 years. Another thing important to mention is that these loans can be forgiven in bankruptcy, which essentially means that you can get rid of them without having to pay back any money. But in order to get them, you must not have had the following events in the last five years: foreclosure, repossession, tax lien, wage garnishment, or default determination. 

What Are Parent PLUS Loans?

As we already stated, the Federal Parents PLUS loan is a type of student loan given to parents in order to pay for their children’s education costs. PLUS Loans for parents are available from many types of lenders and have different terms associated with them.

How Do Parent PLUS Loans Work?

The first step in determining loan eligibility is by completing the FAFSA. A credit assessment is carried out to identify recent defaults or late payments if there have been any in the past. After that, parents fill out a promissory note from the school itself.   

Parent plus student loans allow parents to borrow up to the full cost of tuition from the federal government. They are available only to parents whose children are enrolled in the appropriate school that has a diploma or certificate from an accredited institution. It is important to know that you are not obliged to borrow the full amount. If you are a little more financially stable, you can decide to pay some of the money offered in the form of a PLUS loan. The funds from the loan are sent directly to the school, and everything over the amount of the loan will be forwarded by the school to the parent or, with their permission, to the student themselves.   

Parent PLUS Loans: Pros and Cons

After we reviewed and informed ourselves about what it is and how it works, it’s time to get familiarized with the pros and cons of this type of loan.  


  • Parents can borrow the full cost of attendance but don’t have to, which means you can choose the amount.   
  • The interest rate on Parent PLUS Loans is lower than the interest rates on other types of student loans.   
  • You have more flexibility in terms of when you can repay your loans, as these loans can be repaid in a period of 10 to 25 years.   
  • This loan will not affect your credit score.   
  • You don’t need to provide any additional documentation when applying for a Parent PLUS Loan.   
  • The PLUS loan program does not require a credit check or origination fees.   
  • You don’t have to make payments until after graduation, and there’s no interest accrued during college if your loans are deferred. In case you’re working on your undergraduate degree and are considering applying for a master’s degree in a related field, there is an option that allows you to transfer all or part of your undergraduate federal student loans into the new graduate program (and apply for more funding). However, this only applies if both degrees are from Washington State colleges or universities.   


  • High-interest rates. The interest rate on a PLUS loan is not that high, but still higher than those of the Perkins Loan or Federal Stafford Loans. The current fixed interest rate for a Parent PLUS loan is 7.1%.   
  • High cost of borrowing. There are also fees associated with a PLUS loan that can add significantly to its cost.   
  • There is a late payment fee. Up to $38 for every month’s worth of late payments.  
  • You must demonstrate financial need and be able to repay the loan.   
  • Not have filed for bankruptcy within the past 5 years.   
  • You must be employed full-time while your child is attending school.

How to Qualify for a Parent PLUS Loan?

In order to qualify for a loan, the parent and child must meet certain conditions. The parent must be biological, or the child is adopted, in some cases a step-parent of the child for whom the Parent plus loan application is submitted. Must be a US citizen or if not, must be eligible with a valid social security number. That you have signed a FAFSA stating that you are not in default on your federal student loans and do not owe any federal student grant money. Also, make sure that there is no delay of 90 or more days to any outstanding debt. And lastly, you need to state that this help will only be used for educational purposes.   

What Is the Interest Rate on a Parent PLUS Loan?

The parent plus loan interest rate is fixed and is approximately 7.1%. Which is almost twice as much as some other federal student loans we mentioned above. While most student loans are limited, this type of loan covers the total cost of schooling minus other sources of financial aid.  

Are Parent PLUS Loans a Good Option?

Parents should be aware that these loans are not eligible for federal Pell grants. However, these loans are eligible for Federal Work Study and may be also eligible for state grants and scholarships. Parent Plus loan has a repayment period of 25 years with a fixed interest rate for the length of the loan, so you will upfront know how much you will be paying each month. This is a relatively easy process to go through in order to get financial relief regarding education and all related expenses. The program goes through the Department of Education, so you just need to make sure you qualify according to the program requirements. An additional advantage is that there will be no rigorous application process that you usually need to complete to get a private loan.   

Bottom Line

In conclusion, this can be a great way for parents to help their children pay for college if they need any support in that field. They’re available for parents with credit history, and they don’t require a credit check or cosigner. However, the interest rate is higher than that on some other federal student loans. Nonetheless, the final decision is up to you. Just make sure you keep all the key factors in mind when determining whether or not to take out any loan on behalf of your child!   

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