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Parent PLUS Loans Overview

Parent PLUS Loans describe parents with best credit histories to borrow cash with which to pay the study expenses of their children. Each child must be a dependent undergraduate student enrolled at least half time in an approved college or university.The primary benefit of the PLUS Loan is that parents can borrow federally guaranteed low interest loans to help for their child's education expenses. A Federal PLUS Loan allows parents to borrow the total cost of undergraduate education including tuition fee, room charges and board, supplies fee, lab expenses, travel expenses and many more.

These parent loans are non-need based. Eligibility for the PLUS Loan depends on a modest credit check that determines whether the parent as an adverse credit. An adverse credit history is defined as being more than 90 days late on any debt or having any Title IV debt (including a debt due to grant overpayment) within the past five years subjected to default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment.Your school may require the FAFSA Financial Aid Application to qualify for the PLUS Loan. Be sure to check with your school's financial aid office first. The interest rate on the PLUS Loan is fixed at 8 % as of July 1, 2007.

Unlike other type of loans, including home equity, Parent PLUS Loans require no collateral needed.Interest may be tax deductible.

.PLUS Loan Interest Rate

The Federal Parent PLUS Loan for Undergraduate Students enables parents and legal guardians with good credit histories to pay the education expenses of each child who is a dependent undergraduate student enrolled at least half time in an approved college or university. These loans are available through FFEL program. Most of the benefits to parent borrowers are identical in the two programs.

The interest rate for a new PLUS Loan is fixed for all new PLUS Loans taken out after July 1, 2007 at a rate of 9%. These loans will not have variable rates.
Families may borrow the total cost of undergraduate education including tuition, room and board, supplies, lab expenses, and travel less any other aid.
These loans are non-need based; only credit rating based, which means that anyone can apply.
These loans require no collateral (unlike other type of loans - including home equity)
There is no penalty for early repayment, and consolidating your loans after graduation is easy.
Interest may be tax deductible under the Hope Education Tax Credit.
Completion of the FAFSA may be required.
Funds are usually disbursed quickly, during the first weeks of the semester.

The primary benefit is that families can borrow federally guaranteed, low interest loans to help pay for their child's education expenses, without needing to worry about collateral, need-based forms, or FAFSA preparation time.

PLUS Loan Frequently Asked Questions

How do I apply for the PLUS Loan?

The Student Loan Network is pleased to be able to offer students and families a few simple and secure options for completing the Federal Parent PLUS Loan application.

Do I need to fill out the FAFSA?

It is not required at all schools, but it is strongly recommended. The PLUS Loan is a federal student loan and therefore must be "certified" (approved) by the college's or university's financial aid office. If your college or university requires the FAFSA for all students, they will not certify a PLUS Loan (even though it's a loan for the parents) without a FAFSA on file. Check with your school's financial aid office.

Filing the FAFSA is a good idea because you or your child may be eligible for more financial aid than you think. Filing the FAFSA does not impact your eligibility for the PLUS Loan, as the PLUS Loan is based on credit, not need.

What is the interest rate?

9% fixed.

If you are a parent with PLUS Loans and want to lock in the lowest rate possible, you must consolidate your PLUS Loans after the final disbursement for that academic year.

What are the fees for a PLUS Loan?

Parents are required to pay fees of up to 3% of the principal of the loan. These include an origination fee of 4%, charged by the federal government, plus a guarantee fee of up to 1%, charged by the guarantee agency. These fees are deducted from the principal at each disbursement.

Currently, the guarantee fee of 1% is being waived by most guarantors.

When my child is done with school, can I transfer the PLUS Loan to them?

No. The PLUS Loan is a Parent loan, taken out in the parent's name. The student is not the borrower. If, as a parent, you are interested in a loan that has such a feature, you'll need to resort to private student loans with cosigner release, such as the Act Education Loan. These loans are in the student's name, and after a certain number of consecutive on time payments, the parent (as a co-signer) is released from the loan, making it entirely the student's obligation.

I'm an uncle/grandmother/friend - can I take out a PLUS Loan?

PLUS Loans are restricted to the parents or legal guardians of a dependent undergraduate student. Again, if you're interested in cosigning a loan for someone who is not your child, you'll need to borrow private student loans, such as the Act Education Loan.

What kind of credit is required for a PLUS Loan?

Eligibility for the PLUS Loan depends on a modest credit check that determines whether the parent has an adverse credit history. An adverse credit history is defined as being more than 90 days late on any debt or having any Title IV debt (including a debt due to grant overpayment) within the past five years subjected to default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off.

To ensure that you can obtain a PLUS Loan for your child's education, it is essential to have a recent copy of your credit report.

As a service to Parent PLUS Loan customers, we offer you the ability to order your credit report and score online for a nominal fee, in partnership with the Fair Isaac Company.

What if I am not approved for the PLUS Loan?

There are several options if you are not approved for the PLUS Loan, as some applications are declined for reasons other than poor credit. If you are declined, you can:

Apply for an Alternative Student Loan
Apply for a Home Equity Loan
Find a co-signer and apply again

I already have a PLUS Loan. How can I find out more information about it?

You can check the status of your loans by using the National Student Loan Database System (NSLDS).

When do I begin repaying a PLUS Loan?

Generally, repayment must begin within 60 days after the loan is fully disbursed. There is no grace period for these loans. This means interest begins to accumulate at the time the first disbursement is made. Parents must begin repaying both principal and interest while you are in school.

PLUS Loan Borrower Benefits

The Student Loan Network is pleased to offer a great benefit to Parent PLUS Loan borrowers.

Fixed 9% interest rate.
Fund up to the cost of education minus other aid received.
Full deferment options available to those who qualify.

The primary benefit is that families can borrow federally guaranteed, low interest loans to help pay for their child's education, without needing to worry about collateral, need-based forms, or FAFSA preparation time.

PLUS Loan Repayment Options

You have a choice of repayment options, depending on the loan program you are applying for, so you can choose the one that best meets your individual needs. We will also let borrowers make payments electronically and reward customers for paying on time.

Standard Repayment

Principal and interest payments are due each month throughout the loan repayment term.

Graduated Repayment

Payments are smaller at the beginning of repayment and step up at specified periods and in specified amounts over the term of the loan.

Income-based Repayment

Monthly loan payments are based on a percentage of the borrower's monthly gross income. Stafford Loan offers an income-sensitive repayment plan.

Extended Repayment

Extended repayment provides eligible Federal Stafford, Federal PLUS, Alternative loan, and Federal Consolidation loan borrowers with payment relief through a lengthened repayment term of up to 25 years.

Serialization and Consolidation

With serialization, the loan holder purchases your loans held by other institutions and services them in one account. You make one monthly payment but retain the original terms and interest rate. With our consolidation program, the borrower may refinance multiple loans. The original loans are paid in full and a new loan for the combined balance is originated, for a new term, often at a new interest rate.