PLUS loans are meant to help parents and in some cases,
step-parents, cover the costs of your undergraduate school
expenses. Your parents do not have to prove financial need, but the
loans are unsubsidized -- this means that the interest on the loan
accumulates while you are in school.
PLUS loans are loans your parents can take out to pay for your
education expenses -- you must be their financial dependent and
enrolled at least half time. Also, your parents must pass a credit
check or have someone who can pass a credit check endorse the loan
(which means that person will pay back the loan if your parent does
To receive a PLUS loan, you and your parents must be U.S.
citizens or eligible non-citizens and must not be in default on any
federal education loans or owe an overpayment on a federal
education grant. Other eligibility requirements apply.
How much can my parents borrow?
The yearly limit on a PLUS Loan is equal to your cost of
attending school, minus any other financial aid you receive. For
example, if your cost of attendance is $6,000 and you receive
$4,000 in other financial aid, your parents could borrow up to
How do my parents apply?
Your parents must complete a Direct PLUS Loan application and a
promissory note. A promissory note is a legal document listing the
terms and conditions of the loan. The application and note are in a
single form you can get from your school's financial aid office.
While the Master Promissory Note can be used for loans a parent
receives over multiple years, a separate Loan Request Form must be
filed for each year.
Although it's not a requirement, parents are encouraged to have
their dependent children file a
Free Application for Federal Student Aid (FAFSA). This will
ensure that you can receive the maximum student aid for which you
Are there any borrowing requirements my parents have to
Yes, generally they have to pass a credit check. This is a
review of their credit history to determine if they are likely to
be able to pay back the loan.
If they don't pass, they might still be able to receive a loan
with the help of a relative or friend who can pass the credit
check. This person must agree to endorse the loan and promise to
repay it if your parents don't.
If your parents don't qualify for a loan because they didn't
pass the credit check, they may qualify if they can demonstrate
that extenuating (difficult and unusual) circumstances exist.
If a parent is denied a PLUS loan, there may be other loan
options available to you. You should talk to the financial aid
office at your college to learn more about your options.
For your parents to borrow money for you, you must meet the
general eligibility requirements for federal student aid. Your
parents must also meet some of these general requirements. For
example, they must meet citizenship requirements or be eligible
non-citizens. They may not be in default or owe a refund to any FSA
Can the school refuse the loan application?
Your school can refuse to certify your parents' loan
application, or they can approve a loan for a smaller amount for
which your parents are eligible. The school must document the
reason for its decision and explain the reason to your parents in
writing. The school's decision is final and cannot be appealed with
the U.S. Department of Education.
Do my parents get the money or do I?
The U.S. Department of Education will send the loan funds to
your school. Your school may require your parents to endorse a
disbursement check and send it back to the school.
In most cases, the loan will be disbursed in at least two
installments. (Disbursement is the release of loan funds to the
school for delivery to the borrower.) In other words, your school
will receive at least two payments. No single payment will be more
than half the loan amount. The funds will first be applied to your
tuition, fees, room and board, and other school charges.
If any loan funds remain after these fees are paid, your parents
will receive the amount as a check or in cash, unless they
authorize the amount to be released to you or to be put into your
school account. Any remaining loan funds must be used for your
What's the interest rate on PLUS Loans?
The interest rate is fixed at 7.60% for loans disbursed on or
after July 1, 2018 and before July 1, 2019. Interest is charged
from the date of the first disbursement until the loan is paid in
full. Students and parents may check the interest rate, servicer information, and other financial aid
history at the National Student
Loan Data System.
Interest rate cap for military members - If a
parent qualifies under the Service Members Civil Relief Act, the
interest rate on loans obtained before entering military service
may be capped at 6% during the parent's military service. Parents
must contact their loan servicer to request this benefit.
In addition, parents will not be charged interest (for a period
of no more than 60 months) on Direct Loans first disbursed on or
after October 1, 2008, while a borrower is serving on active duty
or performing qualifying National Guard duty during a war or other
military operation or other emergency, and serving in an area of
hostilities qualifying for special pay.
Other than interest, is there a charge to get a PLUS Loan?
Your parents will pay a fee of 4.276% of the loan for loans
disbursed after October 1, 2016 or 4.272% for loans disbursed
between October 1, 2015 and September 30, 2016. This fee is
deducted proportionately each time a loan disbursement is made. In
other words, because it is a percentage of the amount, the fee will
get smaller as the loaned amount gets smaller.
If your parents don't make their loan payments when scheduled,
they may be charged collection costs and late fees.
How do my parents pay back the loan?
They will repay to the U.S. Department of Education's Direct
Loan Servicing Center.
There are several repayment options for both types of loans.
Parents can choose the 10-year Standard, Extended, or Graduated
Loans can be consolidated. Consolidation is the combining of
several loans into a single loan to reduce the monthly payment
amount and/or increase the repayment period.
Are there any tax credits available for paying back these
Yes, there are tax incentives for certain higher education
expenses. For certain borrowers, student loan interest can be
deducted. This benefit applies to federal and non-federal loans
taken out to pay for post-secondary education costs. The maximum
deduction is $2,500 a year.
You can find out more about these credits and other tax benefits
through the Internal Revenue Service (IRS) :
IRS Publication 970 -- Tax Benefits for
Can my parents cancel the loan if they change their minds, even
if they've signed the promissory note?
Yes. Your school must notify your parents in writing whenever it
credits your account with PLUS Loan funds. This notification must
be sent to your parents within 30 days of the date the school
credits your account.
Your parents may cancel all or a portion of their loan. They
must inform your school within 14 days after the date your school
sends this notice, or by the first day of the payment period,
whichever is later. (Your school can tell you the first day of your
If your parents receive PLUS Loan funds directly by check, they
may refuse the funds by not endorsing the check.
Can the parent's PLUS Loan be transferred to the student so
that the student has to pay it back?
No. A PLUS Loan made to the parent cannot be transferred to the
student. The parent is responsible for repaying the PLUS Loan.
Is it ever possible to postpone repayment of a PLUS Loan?
Yes, under certain circumstances, your parents can receive a
deferment or forbearance on their loan. Forbearance means the
payments are postponed or reduced. Deferment is a period during
which a borrower who meets certain criteria may suspend loan
To qualify, the loan may not be in default.
Generally, the conditions for eligibility and procedures for
requesting a deferment or forbearance apply to both Direct Loans
and PLUS Loans. However, since all PLUS Loans are unsubsidized,
your parents will be charged interest during periods of deferment
If they don't pay the interest as it accumulates, it will be
capitalized. This means that the interest will be added to the
principal amount of the loan, and additional interest will be based
on that higher amount. In other words, the loan will get
Can a PLUS Loan be discharged (canceled)?
Yes, under certain conditions. A discharge releases your parents
from all obligations to repay the loan.
However, the following reasons are not good enough to cancel
your parents' PLUS Loan:
- You didn't complete your program of study at your school
(unless you couldn't complete the program for a valid reason, for
example, the school closed)
- You didn't like the school or the program of study
- You didn't obtain employment after completing the program of
How can I get more information?
For more information on Student Financial Assistance Programs,
contact the Federal Student Aid Information
Phone: 1-800-4-FED-AID (1-800-433-3243)
Spanish speakers are available (se habla español).