How To Qualify For a Parent PLUS Loan

Are you a dependent undergraduate student? If so, you may have heard about Direct PLUS Loans. Parents of dependent students often use Direct PLUS Loans to help pay for college, university, or career school. These federal loans are also called Parent PLUS Loans, and they are made directly to the parent—not the student.

Who Is Eligible for a Parent PLUS Loan?

To qualify for a Parent PLUS Loan, you must be a biological, adoptive, or stepparent of a dependent undergraduate student. Your child must be enrolled at least part-time at a college, university, or career school. You must also meet the general eligibility requirements for federal student aid. Note: A dependent undergraduate student reports information from both themselves and their parents when filing the FAFSA (Free Application for Federal Student Aid).

Credit Requirements for Parent PLUS Loans

You cannot have an adverse credit history to qualify. Adverse credit history includes:

• An outstanding balance over $2,085 that is 90+ days delinquent at the time of the credit report
• An outstanding balance over $2,085 in collection or charged-off in the past two years
• Default on any debt in the past five years
• Bankruptcy, repossession, wage garnishment, tax lien, or foreclosure discharge in the past five years
• Charge-off or write-off of a federal student aid debt in the past five years
  • A charge-off is when a creditor forgives your debt. A write-off occurs when your account is severely past due, and repayment is unlikely.

How Much Can You Borrow?

The maximum Parent PLUS Loan is your child’s cost of attendance minus any other financial aid they receive. The school determines the cost of attendance. In addition, you are expected to begin making payments after the loan is fully disbursed, however, you may request a deferment through which you will not need to make payments while your child is enrolled at least part-time for an additional six months after your child graduates, leaves school, or drops below part-time enrollment.  Parent PLUS loans have a fixed interest rate, and you must pay an origination fee for each loan. Because Parent PLUS loans are not subsidized, interest accumulates once the loan is disbursed, and interest will continue to grow regarding deferment. Therefore, parent PLUS loans charge higher interest rates compared to other federal student loans, but parent PLUS loans also allow a parent to borrow more money from the federal government compared to other federal student loans. However, if you are rejected for the Parent PLUS loan, the student may be eligible for more student loans at a lower interest rate. The only difference is it may not be for as much money, and the student could still have to find other methods for filling the remaining financial aid gaps.