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PLUS Loans

The Parent Loan for Undergraduate Students or PLUS Loan is for parents of dependent undergraduate students and graduate or professional school students to be used to help pay for college or career school. PLUS Loans are affordable and have low interest rates. These loans are insured by the federal government. Schools that participate in the Direct Loan Program offer PLUS Loans.

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Who is Eligible?

For a parent PLUS Loan, eligible borrowers must be the biological or adoptive parent of a dependent undergraduate student enrolled at least half-time at an eligible school. For a graduate Plus Loan, borrowers must be graduate or professional students enrolled at least half-time at an eligible school leading to a graduate or professional degree or certificate. Both loans require the borrower to not have an adverse credit history, and that they or their dependent students meet the criteria for federal student aid.

Borrowing Limits

The maximum amount borrowed cannot exceed the total cost of attendance minus financial aid received. For example, if the cost of attendance is $6,000 and a student gets $4,000 in financial aid, they can borrow up to $2,000. The cost of attendance includes tuition and fees, room and board, books and supplies, transportation, and miscellaneous educational expenses. The school determines and certifies the amount.

Interest Rates and Fees

The current interest rate for a Direct Plus Loan disbursed before July 1, 2020 is 7.08%. Interest rates are fixed for the life of the loan.

In addition to interest, there is a loan fee on all Direct PLUS Loans. A percentage of the loan deducted from each disbursement to pay the fee. The percentage varies depending on when the loan is first disbursed.

Loan Repayment

Direct PLUS Loan enters repayment once the loan is fully disbursed (paid out). Borrowers have 60 days from disbursement to make the first loan payment. Graduate PLUS Loans can take advantage of all federal loan repayment options, while Parent PLUS Loans have more limited repayment options.

Parent borrowers cannot transfer a Direct PLUS Loan to their child. The parent is responsible for repaying the loan.

What else should I know about PLUS Loans?

PLUS Loans can be cancelled or forgiven. Before your money is disbursed, you can cancel part or all of your loan by notifying your college. After the loan is disbursed, you can cancel part or all of the loan within a specific time frame. Your promissory note and information from your or your child’s school will explain the procedures and time frames for canceling your loan. You can also qualify for forgiveness of some or all of the loan if you meet certain conditions.

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Last Reviewed: January 2021