The Federal Parent PLUS Loan is a type of federal loan available to parents of dependent undergraduate students. This loan is intended to help parents cover educational expenses not met by other financial aid. Here are some key points about the Parent PLUS Loan:
Eligibility: The loan is available to parents (biological, adoptive, or, in some cases, stepparents) of dependent undergraduate students who are enrolled at least half-time in an eligible school. Both the student and parent must meet certain eligibility criteria, including U.S. citizenship or eligible non-citizen status.
Credit Check Requirement: Unlike other federal student loans, the Parent PLUS Loan requires a credit check. However, a parent with an adverse credit history may still qualify if they can secure an endorser (co-signer) or provide documentation of extenuating circumstances related to their credit history.
Loan Amount: Parents can borrow up to the cost of attendance (as determined by the school) minus any other financial aid the student receives.
Interest Rate: Parent PLUS Loans have a fixed interest rate, which is set by the federal government and may vary year to year. The rate is typically higher than that for Direct Subsidized and Unsubsidized Loans.
Repayment Options: Repayment generally begins shortly after the loan is disbursed, but parents can request a deferment to delay payments until after the student graduates or drops below half-time enrollment. Parent PLUS Loans also qualify for certain federal repayment plans, such as the Income-Contingent Repayment Plan, if consolidated into a Direct Consolidation Loan.
Fees: Parent PLUS Loans have an origination fee, which is a percentage of the loan amount and is deducted from each disbursement.
The Parent PLUS Loan can be a helpful option for families needing additional funds beyond what student loans and other financial aid provide, though parents should consider the long-term repayment commitment and the interest costs associated with this loan.
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