Parent Loan for Undergraduate Students (PLUS) Loan Overview
What Is a PLUS Loan?
The PLUS Loan is a federal
loan
available to parents of dependent undergraduate students, as well as students pursuing
a graduate or professional degree (Grad PLUS). PLUS Loans have a lower interest
rate and more favorable repayment terms than typical private loans.
Like the
Stafford Subsidized Loan,
the PLUS Loan falls into two categories: a Direct PLUS Loan and a Federal Family
Education Loan (FFEL) Program PLUS Loan.
- Direct PLUS Loan. With a Direct PLUS Loan, you borrow money directly
from the Department of Education. Direct PLUS Loans offer lower interest rates than
FFELP PLUS Loans.
- FFEL Program PLUS Loan. With a FFEL Program PLUS Loan, you borrow
money from a participating lender at a slightly higher interest rate than a Direct
PLUS Loan. If you qualify for a FFEL Program PLUS Loan, your school may provide
a preferred lender list, giving you some options for lenders. Remember that a preferred
lender list is only a starting place when shopping for financing.
Click here
for more information on how to choose the best loan for you.
Repayment of PLUS Loans begins 6 months after the student graduates, leaves school,
or is enrolled less than half time.
PLUS Loan Eligibility and Requirements
A PLUS Loan allows you to borrow as much as the full
published cost of attendance
minus any other financial aid you receive. For instance, if your total cost of attendance
is $10,000 and you receive $5,000 from other student aid programs, you can borrow
as much as $5,000 through the PLUS Loan.
The borrower of the PLUS Loan (your parents if you are a dependent student) must
demonstrate a good credit history. If a PLUS Loan applicant can’t demonstrate good
credit, he or she might still be able to receive a loan by obtaining an "endorser"
who does have a good credit history. An endorser is someone who agrees to repay
the loan if the borrower fails to do so.
Applying for a PLUS Loan
To borrow money through the PLUS Loan program, you must fill out the
federal student aid application (FAFSA).
Also, the borrower must complete a loan application and a master promissory note,
both of which are available through the college’s financial aid office.