Everything You Need to Know About a Parent PLUS Loan

A Federally-Financed Way to Help Your Student Pay for College Expenses (Care Packages Not Included)

Sending your child to college is bittersweet: You’re so happy that the kid you’ve raised is working toward their future, but you aren’t looking forward to finding ways to finance it.

The truth is, the vast majority of parents in the United States are unable to pay tuition and fees in full and out-of-pocket. Not that many people have spare tens of thousands of dollars lying around, even if they worked hard to save for their child’s education.

The U.S. Department of Education makes Parent PLUS loans through universities participating in the federal Direct Loan Program, so you can borrow money in your own name to help your student pay for college. These loans are easily balanced into your monthly budget, so you’ll have enough of your paycheck left over to send a college care package from My College Crate. 

When Can I Request a Direct PLUS Loan?

Parent PLUS loans are offered during the FAFSA process to qualifying families. Parents do not need to take out the full amount, and can select how much they’d like to access to help offset the costs of attending college. 

The maximum amount you can borrow is the cost of attendance at your child’s university, minus any other financial assistance your child receives, including their own student loans or scholarships.

Parents who accept a Parent PLUS loan fill out a promissory note from their child’s school; the federal loan program sends the funds directly to the school, and any excess funds can be sent to the parent or student (with the borrowing parents’ permission). 

Who is Eligible for a Parent PLUS Loan?

Only biological or adoptive parents of a dependent graduate student enrolled at least half-time can receive this federal loan.

You must also be able to meet the following requirements:

  • Within the prior two years, you can’t have one or more debts that are more than 90 days overdue, totalling more than $2,085.
  • Within the prior two years, you can’t have a collection or charge off on your credit record.
  • Within the prior five years, you can’t have a loan default, discharge of debts in bankruptcy, foreclosure, repossession, wage garnishment, write-off of federal student aid debt, or a tax lien. 

Can I Get a Parent PLUS Loan with Bad Credit?

Even if your credit history isn’t as great as it could be, you may still be able to receive this loan if you can provide documentation of extenuating circumstances, or by asking a friend or family member to be an endorser. An endorser agrees to pay back the loan in the event that you do not. 

Extenuating circumstances are reasons that can prove that your credit score does not accurately describe your ability or willingness to repay a Parent PLUS loan. Common extenuating circumstances include a divorce decree showing you aren’t required to pay the debt; proof that you’ve been making regular payments on the debt for the past six months; or documentation of excessive medical bills. 

When Do I Make My Loan Payments?

If you request a deferment, you don’t need to make any loan payments while your student is enrolled at least half-time, plus for a six-month grace period after graduation.

Interest will accrue during deferment; you can choose to pay the interest each month, or add it to the principal balance of your Parent PLUS loan. For PLUS loans disbursed on or after July 1, 2020, and before July 1, 2021, the interest rate is 5.3 percent. This is a fixed interest rate that will not change for as long as you have the loan.

If you do not request a deferment, you will begin making payments after the loan is disbursed to your child’s university or college.

What Else Do I Need to Know?

If you are thinking of borrowing a Parent PLUS loan, you should know that:

  • You cannot transfer your loan responsibility to your child.
  • Prior to loan disbursement, you can cancel all or part of your loan at any time. To cancel, notify your child’s school. After disbursement, you can cancel all or part of the loan within certain time frames. Refer to the promissory note you signed when requesting the loan for more information
  • You may be eligible to have all or part of your loan forgiven or discharged. Learn more on the U.S. Department of Education website.

Sweeten the Deal for Your Student with Monthly Care Packages

Your student is so grateful for your help in funding their college dream. To help keep them motivated and joyous, send them a monthly college care package from My College Crate. Our subscription boxes include fun items your student will love — think snacks, stress-busters, fun activities, and other surprises. Subscribe today, and pay only $29.99 for your first care package!

Want the latest deals & discounts?

Sign up for our newsletter and stay up to date on our latest products as well as deals and discounts!