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How federal Direct Parent PLUS Loans work

Fund your child's education with fixed rates and flexible repayments.

If your child’s struggling to qualify for enough federal Direct Subsidized and Unsubsidized Loans, a Direct Parent PLUS Loan might be the next best choice. Rather than signing on to a private loan with potentially higher rates and fewer repayment options, a Parent PLUS Loan offers some of the benefits — though not all — of federal loans.

How do Parent PLUS Loans work?

Parent PLUS Loans are federal student loans in the parent’s name, rather than the student’s. These loans are available to parents of dependent undergraduate students and could be a good option if applicants can’t qualify for enough funding through the less-expensive Direct Subsidized and Unsubsidized Loan programs.

All borrowers get the same rates and fees, which Congress sets each year. And the credit requirements are generally less strict than private student loan providers, making it a potentially better deal than cosigning a private loan with your child.

How much can I borrow?

You can borrow up to 100% of your child’s cost of attendance (COA) — after all other loans and financial aid have been subtracted.

Your child’s financial aid award should include information about the COA and financial aid. If your child has yet to apply to school, you can often get an idea of the cost by visiting the school’s financial aid office website.

How much does it cost?

  • Fixed interest rate: 6.08%
  • Origination fee: 4.236%

The two main costs to consider are interest and fees. All parents get the same fixed rate, which changes on July 1 each year. The Department of Education (DoE) also deducts an origination fee from the loan before the school receives the funds.

Am I eligible for a Parent PLUS Loan?

To qualify for a Parent PLUS Loan, you need to meet the following criteria:

  • Biological or adoptive parent of an undergraduate student
  • Child qualifies as a dependent — according to the DoE
  • No adverse marks on your credit report
  • Meet other general requirements to qualify for federal aid — this applies to both you and your child

Can I get a Parent PLUS Loan with bad credit?

You can. Even if you have adverse marks on your credit report, you may still be able to qualify if you:

  • Add an endorser. An endorser is like a cosigner — someone with good credit who promises to repay the loan if you can’t.
  • Provide proof the negative mark is incorrect. Have an error on your credit report? You can still qualify if you send documentation proving that it’s a mistake.
  • Demonstrate you were going through extenuating circumstances. If you went through a divorce or faced an unexpected financial disaster, you could be approved if you provide a statement explaining the situation along with documents to back it up.

What are my repayment options with a Parent PLUS Loan?

Parent PLUS Loans are only eligible for a limited number of repayment plans offered by the Department of Education. They’re also the only federal loan where repayments begin as soon as the funds are disbursed.

Repayment programTermsHow it worksEligible for federal forgiveness?
Standard Repayment Plan10 yearsMake the same fixed repayment each month.No
Graduated Repayment Plan10 yearsMake repayments that increase over time — usually every two years.No
Extended Repayment Plan25 yearsMake either fixed repayments or repayments that increase over time — usually every two years.No

Parents might be eligible for the Income-Contingent Repayment (ICR) Plan if they consolidate their debt with a federal Direct Consolidation Loan. This program requires you to make monthly payments of 20% of your income or what you’d pay on a 12-year plan with fixed repayments — whichever is less. The government forgives any remaining balance after 25 years of ICR repayments.

9 ways to repay your Parent PLUS Loans

Does the Parent PLUS Loan program offer deferment or forbearance?

Yes, Parent PLUS Loans are eligible for all deferment and forbearance options the federal government offers.

Parents who want to hold off on repayments can apply for Parent PLUS Borrower Deferment, which postpones payments until six months after the student leaves school or drops below half time. Otherwise, there are several other ways to put your repayments on hold during temporary financial setbacks like unemployment or rehabilitation.

How to avoid defaulting on your Parent PLUS Loans

Is interest capitalized during deferment?

It is. Interest starts adding up as soon as the school receives the funds. If you apply for Parent PLUS deferment — or any other program — all unpaid interest is capitalized and added to your loan balance. This means you’re effectively paying interest on interest. You can avoid this by making repayments right away or requesting to make interest-only repayments through your servicer, if it’s an option.

Can I qualify for forgiveness with a Parent PLUS Loan?

If you’re interested in forgiveness as a parent borrower, you might want to consider consolidating your federal debts with a Direct Consolidation Loan. This allows you to sign up for the ICR Plan, which makes you eligible for Public Service Loan Forgiveness or ICR forgiveness after 25 years of repayments.

Otherwise, you are ineligible for any federal forgiveness programs.

How to get Parent PLUS loan forgiveness

Federal loans fall short? Cover the gap with private student loans

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5 to 20 years
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Bottom line

A Parent PLUS Loan might be a good alternative to private student loans if your child is unable to qualify for enough unsubsidized federal funding. However, it’s one of the most expensive federal loan options. You might be able to find a better deal with private lenders if you have strong enough credit and a high income.

Explore other ways to finance your child’s education with our guide to student loans.

Frequently asked questions

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