Applying for a Parent PLUS Loan is a straightforward process, but it requires careful attention to detail. The first step is ensuring that the student has completed the Free Application for Federal Student Aid (FAFSA). This form determines eligibility for federal student aid, including grants and work-study programs, before parents take on additional debt.
Once the FAFSA is on file, parents must obtain or retrieve their Federal Student Aid (FSA) ID. This unique login is required to access the Parent PLUS Loan application. Parents should use their own FSA ID, separate from their child’s, to complete the process.
The actual application is available on the Federal Student Aid website at studentaid.gov. After logging in, parents should navigate to the Direct PLUS Loan Application for Parents section. Here, they will provide details about themselves, their child, and the amount they wish to borrow.
Table of Contents
Approval
A key part of the application process is the credit check. The Department of Education conducts this review to assess the parent’s credit history. Unlike private loans, Parent PLUS Loans do not require a high credit score, but parents cannot have an adverse credit history, such as recent defaults or bankruptcy.
If approved, the next step is signing a Master Promissory Note (MPN). This legal agreement outlines the terms of the loan, including repayment obligations. Parents must read and sign this document to confirm their understanding and acceptance of the loan terms.
If the application is denied due to credit issues, parents have two options: they can appeal the decision by demonstrating extenuating circumstances or secure an endorser. An endorser is someone who agrees to repay the loan if the parent is unable to do so.
Disbursement
Once the loan is approved and the MPN is signed, the school will receive the funds directly. These funds will first be applied to tuition, housing, and other institutional costs. If there is any remaining money after these expenses are covered, the school will issue a refund. Parents can choose whether the excess funds go to them or directly to the student.
Repayment
Repayment on Parent PLUS Loans begins immediately after disbursement. However, parents can request a deferment while their child is enrolled at least half-time, postponing payments until after graduation or withdrawal.
There are several repayment plans available:
| Repayment Plan | Details |
|---|---|
| Standard Plan | Fixed payments over 10 years |
| Graduated Plan | Payments start low and increase every two years |
| Extended Plan | Payments spread over 25 years (for loans over $30,000) |
Choosing the right repayment plan depends on the parent’s financial situation and ability to make monthly payments. Some parents may also qualify for loan consolidation or income-driven repayment options to manage their debt more effectively.
Taking out a Parent PLUS Loan can be a helpful way to bridge the financial gap for college expenses. However, parents should carefully consider their ability to repay the loan before borrowing. By knowing the application process, approval criteria, and repayment options, parents can make an informed decision that best supports their child’s education while maintaining financial stability.
FAQs
Do Parent PLUS Loans require a credit check?
Yes, a credit check is required, but a high credit score is not necessary.
Can I defer repayment of a Parent PLUS Loan?
Yes, parents can request a deferment while the student is enrolled at least half-time.
What happens if my Parent PLUS Loan application is denied?
Parents can appeal the decision or apply with an endorser to qualify.
How are Parent PLUS Loan funds disbursed?
The school applies funds to tuition first, then refunds any remaining amount.
Are there repayment plans for Parent PLUS Loans?
Yes, options include standard, graduated, and extended repayment plans.
