Parent PLUS Loans: Eligibility, interest rates, and more

Parents—there are loans for you, too  

Has your student maxed out scholarships, grants, and federal student loans—and still needs money for college? The Parent PLUS Loan might be an option for you. Here’s a breakdown of what it is and how to apply, so you can figure out if it’s a good fit. 

What is a Parent PLUS Loan?

This loan, also known as a Direct PLUS Loan, is a credit-based federal education loan provided directly to parents of dependent students to help cover the costs of their student's college or career school.  

What are the eligibility requirements?

For parents:

• Must be the biological or adoptive parent of a dependent student enrolled at least half-time
• Must be a U.S citizen or eligible non-citizen
• Meet general eligibility requirements for federal student aid
• Have a good credit history

Note: Grandparents and legal guardians can only apply if they’ve legally adopted the student.  

For students:

• Must be a U.S. citizen or eligible non-citizen
• Can’t have previous student loan defaults unless they’ve been resolved or consolidated into a federal direct loan

How to apply for a Parent PLUS Loan

1. Start with the FAFSA^®
   Fill out the Free Application for Federal Student Aid (FAFSA®). This is where you’ll first see the option for a Parent PLUS Loan. These loans are meant to supplement school, state, and other federal financial aid offered. One way these loans are different from their federal student loan counterparts is that a credit check is performed to determine any late payments and recent defaults in your credit history.
2. Apply online
   You can apply directly online. Be sure to download and sign the Master Promissory Note (MPN), which outlines your agreement to repay the loan. If you have any questions on how to apply or sign the MPN, contact the school’s financial aid office.
3. Choose how much you want to borrow
   Parent PLUS Loans are awarded for up to the total cost of attendance minus any financial aid your child has received. The money goes directly to the school, and if there’s any leftover, the refunds are sent to the parent or to the student with the parent’s permission.
   
   After you apply, the government will send your info to the school to confirm how much you can borrow.
   
   Pro tip: You don’t have to borrow the full loan amount. Consider using a mix of savings, payment plans, tax credits, or other student loans to cover costs without borrowing more than necessary. 

Parent PLUS Loan interest rates

The interest rate for Parent PLUS Loans disbursed (sent out) between July 1, 2024, and June 30, 2025, is 9.08%—this rate is fixed for the life of the loan. There’s also a 4.228% fee for loans disbursed on or after October 1, 2020.^{footnote 3} These rates can change on July 1 each year, but once you take out the loan, the rate never changes. You may be able to receive a 0.25 percentage point discount if you set up automatic monthly payments.

While Parent PLUS Loans have higher interest rates than federal student loans, they can cover the full cost of attendance minus other financial aid, whereas federal student loans have annual borrowing limits.

Note: Private student loans may offer a lower rate than Parent PLUS Loans, especially for parents with excellent credit, so it’s worth comparing your options. 

Credit requirements

For two years before your credit is pulled:^{footnote 4} 

• No debts over 90 days overdue totaling more than $2,085
• No collections or charge-offs
• No adverse credit history

For five years before your credit is pulled:^{footnote 4}

• No loan defaults
• No bankruptcy discharge
• No foreclosure or repossession
• No tax liens or wage garnishments
• No write-off of federal student aid debt

What if you don’t have good credit?

If your credit needs improvement, you may still be able to get a Parent PLUS Loan by adding an endorser or providing documentation of extenuating circumstances. Here’s how they work.   

Add an endorser

Like a cosigner for a private student loan, an endorser is someone with a good credit history who agrees to repay the loan if the borrower doesn’t repay it. Endorsers are legally responsible to repay the loan, including interest, late fees, and collection costs. Adding one can up your chances of getting approved for a Parent PLUS Loan, but there are pros and cons to keep in mind.

Pros:

• Secure the remaining funds needed for your student’s school year
• Have time to improve your credit before borrowing for future years
• May be able to have them cosign a private student loan for your student (which may have a lower interest rate). If so, your student could remove the cosigner’s name from the private loan, provided the student applies and is approved for cosigner release.

Cons:

• Approval doesn’t depend on your income or ability to repay
• May be approved for more than you can afford
• If the borrower defaults, the endorser’s credit score can drop. The relationship between the endorser and the borrower could be affected as a result.

Document extenuating circumstances

There could be a reason why your credit report doesn’t fully reflect your true ability to repay the loan. Documentation of extenuating circumstances for Parent PLUS Loans involves submitting evidence of personal or financial hardships to request loan relief.

It’s important to document any extenuating circumstances and show how things have improved.

Note: If you’re approved for a PLUS Loan due to extenuating circumstances or an endorser, you’ll need to complete around 20-30 minutes of credit counseling in one sitting.

What happens if you don’t get approved?  

If you’re denied a Parent PLUS Loan, your student may be eligible for more federal student loans at a lower interest rate. The only difference is it may not be for as much money, and your student might still have to find other methods to cover the rest, like a private student loan.  

Paying back Parent PLUS Loans 

One of the biggest perks to Parent PLUS loans is that some of the same repayment plans available on federal student loans also apply to these.

You can’t transfer repayment responsibility of Parent PLUS loans to the student. If the goal is to have the student ultimately be responsible for the debt, consider cosigning a private student loan for them. Most private student loans allow students to apply for cosigner release where you can be removed if the student makes 12 to 24 on-time payments and meets all other eligibility requirements.

When loan repayment begins

Repayment begins 60 days after the final disbursement (payout) for that academic year. Disbursements are made based on school terms. There are no prepayment penalties, so you can start paying back the loan earlier if you want. Interest accrues (grows) while the student is in school, but you can choose to pay it off as you go.

You can request deferment for each academic year while your student is enrolled at least half-time. After your student leaves school, you'll have a six-month grace period before payments start. For example, if your student graduates in May, the first payment on the Parent PLUS loan would be due in November. If you don’t request a deferment, you’ll be expected to start making payments after the loan is fully disbursed.

Pick your repayment plan

• Income-contingent repayment plan (requires income verification): The payment can be higher than plans available to students BUT it still allows you to make lower monthly payments if you qualify. To qualify for the income-contingent plan, you may want to consider consolidating your Parent PLUS Loans to one federal direct loan after you finish all the borrowing for your student or students.  
• A 10-year extended repayment plan or a Parent PLUS consolidation loan (income verification not required): Consolidation means you are combining all your loans into a single loan. Then, you can potentially choose a repayment plan for up to 30 years to keep payments low. While payments may be lower, keep in mind you may end up paying more over the life of the loan if you extend the term. If you consolidate your loans, you may be eligible for other repayment plans, such as an income-driven plan with an “Eligible if consolidated*” label.
• Public Service Loan Forgiveness (PSLF): It may be possible to get some Parent PLUS Loans forgiven via the Public Service Loan Forgiveness—partial forgiveness based on working for specific public service employers in specific roles. To get an idea of whether you could qualify, call the number on the PSLF employer certification form. It’s important to read up on loan forgiveness programs. They are by no means a guarantee! 

Remember, you can always repay student loans early without penalty, so it may help if you choose a longer, more affordable repayment option and make extra payments if you can. It’s very common for borrowers to send in just a few extra dollars monthly to reduce the balance and the interest charged. Ten dollars per month or more added to your monthly payment may reduce months off your total repayment time frame.  

Is a Parent PLUS Loan right for you?  

Before considering a Parent PLUS Loan, be sure to explore all your options—both federal and private. If you’re looking to take on the financial responsibility of a loan rather than have it fall on your student, this loan could help you get the money you need. With some of the same benefits as other federal student loans, a Parent PLUS Loan might be a good addition to your family’s paying-for-college solution.