Plus - Parent Loan

Parents of dependent students can take out loans to supplement their children's financial aid packages. The PLUS loan lets parents borrow money to cover any costs not already covered by the student's financial aid package, up to the full cost of attendance. If your school participates in the Federal Family Education Loan Program (FFELP), your PLUS loan is administered by a commercial lender. 

To apply, visit:

PLUSloan.net or ParentPlusLoan.com

Am I eligible for this loan?

To be eligible, a parent must apply and pass a credit check. If unable to qualify, they still might be able to receive a loan if a relative or friend who can pass the credit check agrees to endorse the loan, promising to repay if the parent fails to do so. 

How much can I borrow with this loan program?

The yearly limit for the PLUS loan is equal to the cost of attendance minus any other financial aid your child receives. For example, if your child's cost of attendance is $8,000 and your child receives $3,000 in financial aid, you can borrow up to $5,000 with a PLUS loan.  

How can I get this loan?

The parent who plans on borrowing the loan should submit a completed PLUS application (available from your school, lender, or guaranty agency) to the financial aid office at the child's school.  

When will I get my money?

In most cases, your loan will be disbursed in two installments. Money will be used first to pay your child's tuition and fees. If any loan money remains, the borrowing parent receives that amount, unless he or she has authorized it to be released to the child's account. Schools must notify parents when funds are credited. Lenders send funds directly to the school. 

Can I cancel the loan?

Yes. Your school must notify you in writing whenever it credits your account with your loan proceeds. This notification must be sent to you no earlier than 30 days before and no later than 30 days after the school credits your account. You may cancel all or a portion of your loan if you inform your school within 14 days after the date that your school sends you this notice or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period.  

What is the interest rate of this loan?

The interest rate can change each July but by law it will never be more than 9 percent. 

Are there any special fees I will pay?

Many guarantors no longer charge a guarantee fee for education loans. If they do, this fee could be up to 1 percent of the loan amount. Additionally, your lender may charge an origination fee up to 3 percent of the loan amount. Guarantee and origination fees, if charged, are deducted from the loan proceeds before they are sent to the school. 

What are my repayment options?

The lender will arrange a repayment schedule. You have up to 10 years to repay your loan, and you must pay at least $50 a month. Repayment of principal and interest begins 60 days after the loan is fully disbursed. Parents can opt to let the interest capitalize until the student leaves school. However, any interest that accrues from the date of disbursement is added to the outstanding loan balance through a process called capitalization.

Also see: PLUSloan.net and ParentPlusLoan.com