Federal PLUS Loan

Overview

Parents of dependent students can borrow a PLUS Loan to help pay education expenses of an undergraduate student enrolled at least half time in an eligible program at an eligible school. PLUS Loans are available through the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. An acceptable credit history is a requirement to receive a PLUS loan.

Applying for a Federal PLUS Loan

While filing the Free Application for Federal Student Aid (FAFSA) is technically not a requirement to receive a PLUS loan, most schools do require a FAFSA be filed before they will certify a PLUS. We always recommend families file a FAFSA whether you think you will qualify for federal assistance or not.

If the school is a Direct Loan school, a parent will need to contact the school directly in order to receive the loan. Funds for "Direct Loans" come directly from the federal government.

If the school (and most are) is a FFEL school, you will need to obtain your loan through a bank or lender. Your school may provide a list of lenders to help you narrow your choices. However, you may choose any lender you wish including lenders in our LoanFinder. Compare your options before you borrow. Many lenders offer repayment incentives that can lower the cost of a PLUS loan.

Eligibiity

A parent is generally required to pass a credit check. However, the check is not as stringent as it is for other loans with which you may be more familiar (e.g. an auto loan or mortgage). If the parent borrower is denied based on credit, they may still be able to get the loan if they can get someone such as a relative to endorse (co-sign) the loan. The student and parent must also meet other general eligibility requirements for federal student aid.

Loan Limits

A parent may borrow up to the cost of attendance (established by the school) minus other financial aid including other loans.

Interest Rate

For PLUS Loans disbursed on or after July 1, 2006, the interest rate is fixed at 7.90 for Direct PLUS Loans and 8.50 percent for FFEL PLUS Loans.

Fees

A fee of up to 4% can be charged to borrow a PLUS loan. Many lenders pay this fee on behalf of borrowers, but not all. It's important to carefully review the terms of your loan when they are presented by your lender. Our LoanFinder will also let you know what, if any, fees will be charged by a particular lender.

Repayment

Repayment of a PLUS loan begins immediately after the final disbursement of the loan. PLUS loans, like all federal loans, are disbursed in equal amounts over the course of an academic year. For a school that uses semesters, that would mean one disbursement in the beginning of the Fall and one in the beginning of the Spring. Payment would begin after the Spring disbursement.

Repayment Term

The standard repayment term is ten years. However, depending on the total amount borrowed the repayemtn term can be extended up to 25 years. If extenuating circumstances develop during repayment, a borrower may request forbearance (temporarily stop paying). During forbearance, the borrower does not have to make payments, but interest does continue to accrue and is added to the principal if no payments of interest are made.