Parent PLUS Loans allow parents to borrow for their dependent children's undergraduate education. While providing access to funds, these loans carry significant responsibility that parents must carefully consider.

What Are Parent PLUS Loans?

Parent PLUS is a federal loan where:

  • The parent is the borrower, not the student
  • Parent is legally responsible for repayment
  • Can borrow up to cost of attendance minus other aid
  • Credit check required (but not credit score based)

Eligibility Requirements

Parent Requirements

  • Biological or adoptive parent of dependent undergraduate student
  • No adverse credit history (specific negative events in last 5 years)
  • U.S. citizen or eligible non-citizen
  • Not in default on federal education loans

What Is Adverse Credit?

Adverse credit history includes:

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  • Bankruptcy discharge within 5 years
  • Foreclosure or tax lien within 5 years
  • Accounts 90+ days delinquent
  • Debt in collections for $2,085+
  • Wage garnishment or write-off within 5 years

If denied, you may appeal with documentation of extenuating circumstances or obtain an endorser (cosigner).

Interest Rates and Fees

Parent PLUS loans have:

  • Fixed interest rate (set annually, typically higher than student loans)
  • Loan fee (deducted from each disbursement)
  • Interest accrues from disbursement
  • No subsidized interest option

Repayment Options

Standard Repayment

  • Fixed payments over 10 years
  • Payments begin immediately (or after student graduates)
  • Highest monthly payment, lowest total interest

Graduated Repayment

  • Payments start lower, increase every 2 years
  • 10-year term
  • Good if expecting income increases

Extended Repayment

  • Up to 25-year term
  • Lower monthly payments
  • Requires $30,000+ in Direct Loans
  • More total interest paid

Income-Contingent Repayment (ICR)

  • Only IDR option for Parent PLUS
  • Must consolidate into Direct Consolidation Loan first
  • 20% of discretionary income
  • 25-year forgiveness

PSLF for Parent PLUS

Parent PLUS loans can qualify for Public Service Loan Forgiveness if:

  1. Parent consolidates into Direct Consolidation Loan
  2. Parent works full-time for qualifying employer
  3. Makes 120 qualifying payments on ICR

The parent—not the student—must be the public service employee.

Transferring Parent PLUS to Student

Parent PLUS loans cannot be legally transferred to the student. However, students can:

  • Refinance Parent PLUS into their own private loan (if they qualify)
  • Make payments on parent's behalf (informal arrangement)
  • Repay parents directly (no tax implications up to gift limits)

Considerations Before Borrowing

Important questions to ask:

  • Retirement impact: Will borrowing affect retirement savings?
  • Income stability: Can you afford payments if income drops?
  • Other children: Will you need to borrow for other kids too?
  • Student options: Has your child maximized their own federal loans first?
  • Alternative schools: Would a less expensive school make sense?

Alternatives to Parent PLUS

Consider these options before Parent PLUS:

  • Private student loans in student's name (with cosigner)
  • HELOC or home equity loan
  • Scholarships and grants
  • Work-study programs
  • Student working during school
  • More affordable school choice

Best Practices for Parent Borrowers

  1. Only borrow what's truly necessary
  2. Have a repayment plan before borrowing
  3. Consider making interest payments while student is enrolled
  4. Don't sacrifice retirement for education borrowing
  5. Communicate expectations with your student

Apply at StudentAid.gov