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Last update: July 24, 2024
5 minutes read
Explore the essentials of Parent PLUS loans: rates, qualifications, pros, cons, and alternatives.
By Brian Flaherty, B.A. Economics
Edited by Rachel Lauren, B.A. in Business and Political Economy
Learn more about our editorial standards
By Brian Flaherty, B.A. Economics
Edited by Rachel Lauren, B.A. in Business and Political Economy
Learn more about our editorial standards
Wondering how to pay for the remaining tuition costs that your child's financial aid didn't fully cover? You can consider a federal Parent PLUS loan, which comes with fixed rates and different repayment plans.
Let's find out what a Parent PLUS loan is and how it might help you pay for your child's education, without causing financial issues for you. We'll talk about how to borrow, flexible ways to repay, and even mention some opportunities for loan forgiveness. Also, you’ll learn how to not go overboard when borrowing with Parent PLUS loans.
A federal Parent PLUS loan is a government-offered loan that parents can use to pay for their child's education costs not covered by other financial aid. It offers fixed interest rates and flexible repayment options, along with potential paths to loan forgiveness.
Parent PLUS loans are part of the federal financial aid program that lends money to parents for their child's education expenses. You can borrow up to the total cost of school minus any financial aid like scholarships or grants.
These loans have a fixed interest rate, which means there are no surprises as you repay. They also have a specific list of repayment plans to fit different financial scenarios.
Here's a quick breakdown of the current Parent PLUS loan basics:
Not everyone can qualify for these loans. To be eligible for a Parent PLUS loan, you need to be the biological or adoptive parent of a dependent undergrad student.
The student must be enrolled at least half-time at a recognized institution. Credit checks are done, but you don’t need perfect credit to be eligible. However, a credit history that includes delinquency or default might create the need for a cosigner, or as we call it in the federal loan world, an endorser.
Applying for a parent PLUS loan involves a few steps. While applying for the loan itself can take less than a half-hour on the official Student Aid website, you’ll need to take care of a few other items before getting to that point:
Sometimes the PLUS loan isn't the perfect match. Maybe a private loan with a potentially lower interest rate could be a better fit for your wallet.
Remember though, with private loans, you lose some of the benefits that federal student loans give you—things like loan forgiveness and flexible repayment plans. Consider every angle before you commit.
When it comes to Parent PLUS loans, navigating the ins and outs is important. Making smart choices can keep your finances in check while supporting your child’s education. Here's a quick reference table to help you remember the key actions to take and things to avoid.
Do file the FAFSA to kickstart the process.
Do exhaust scholarship and grants before borrowing.
Do use a student loan calculator to estimate payments.
Do consider your repayment options carefully.
Do explore loan forgiveness opportunities.
Don't overlook credit mistakes; address them first.
Don't borrow more than needed, even if you can.
Don't forget about the loan fee, which will cut the final amount received.
Don't delay payments without considering deferment or forbearance.
Don't assume private loans have the same benefits as federal ones.
Parent PLUS loans can help families pay for college, but they have both positives and negatives. It's important to understand these aspects to decide if taking this federal loan makes sense for your financial plan.
At TuitionHero, we offer comprehensive financial guidance, including Private Student Loans, Student Loan Refinancing, Scholarships, FAFSA assistance, and Credit Card options. We support every aspect of Parent PLUS Loans, from borrowing calculations to repayment plans, ensuring you can assist with your child's education while maintaining your financial stability.
Yes, Parent PLUS Loans are specifically designed for parents of dependent undergraduate students. They are the only federal borrowing option available to parents.
No, your child can't take over a Federal Parent PLUS Loan directly. The parent who borrowed the money is the one who has to pay it back.
But, after your child graduates, you might look into options where they take over the loan. This could mean refinancing with a private lender; but keep in mind that this might mean losing some benefits that come with federal loans.
Yes, parents can consolidate multiple Parent PLUS Loans into a Direct Consolidation Loan. This can simplify loan repayment by combining multiple loans into a single monthly payment.
Helping your child with the financial side of college is a big deal. A Parent PLUS loan can be a helpful tool if you plan carefully and avoid getting into too much debt.
With TuitionHero, we're here to help you figure things out together. Our goal is to guide you and give you the information you need—whether it's choosing the right loan or finding the best way to pay it back. Keep going with confidence, knowing you have the support to make smart choices for your family's education and financial future.
Brian Flaherty
Brian is a graduate of the University of Virginia where he earned a B.A. in Economics. After graduation, Brian spent four years working working at a wealth management firm advising high-net-worth investors and institutions. During his time there, he passed the rigorous Series 65 exam and rose to a high-level strategy position.
Rachel Lauren
Rachel Lauren is the co-founder and COO of Debbie, a tech startup that offers an app to help people pay off their credit card debt for good through rewards and behavioral psychology. She was previously a venture capital investor at BDMI, as well as an equity research analyst at Credit Suisse.
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