Parent PLUS Loan
Definition
A Parent PLUS Loan is a federal loan available to the parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.
Detailed Explanation
The Parent PLUS Loan is part of the Direct Loan Program administered by the U.S. Department of Education. Unlike other forms of financial aid, it is the parent—not the student—who applies for and is responsible for repaying the loan.
The loan can cover any eligible education expenses, including tuition, room and board, books, and other school-related costs after other financial aid is applied. To be eligible, parents must have a dependent child enrolled at least half-time in an eligible undergraduate program and pass a credit check.
The interest rate for Parent PLUS Loans is fixed and typically higher than rates for undergraduate Direct Loans. There is also an origination fee deducted from each loan disbursement. While repayment generally begins immediately after the loan is fully disbursed, there are deferment and forbearance options available for parents who need temporary relief from payments.
Example
If a student's annual tuition and living expenses total $30,000 and they receive $20,000 in other financial aid, their parent could potentially borrow up to $10,000 through a Parent PLUS Loan to cover the remaining expenses.
Key Articles Related To Parent PLUS Loan
Related Terms
Direct Subsidized Loans: Federal loans for eligible undergraduate students who demonstrate financial need to help cover the costs of higher education.
Direct Unsubsidized Loans: Federal loans for eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.
Student Aid Index: Represents the amount of money that a student's family is expected to contribute towards their college expenses for one year.
Deferment: A period during which repayment of the principal and interest of a loan is temporarily delayed.
Frequently Asked Questions
Who can apply for a Parent PLUS Loan?
Parents of dependent undergraduate students are eligible to apply for a Parent PLUS Loan.
What is the interest rate for Parent PLUS Loans?
The interest rate is fixed by the government and can vary each year for new loans.
Can Parent PLUS Loans be deferred?
Yes, there are deferment and forbearance options available for those who qualify.
Is there a credit check for Parent PLUS Loans?
Yes, a credit check is conducted, and applicants must not have an adverse credit history.
Editor: Ashley Barnett