As a parent(s) of a dependendent undergraduate student you may be able to borrow money with low interest for your student's college education through the Federal PLUS Loan Program. Effective July 1, 2010, all new Federal PLUS Loans come directly from the U.S. Department of Education (ED) under the William D. Ford Federal Direct Loan Program (Federal Direct Loans).* The financial aid office at the college of attendance will assist you with the loan application process, if you decide to borrow.
Applicants who wish to take advantage of this program do not need to demonstrate financial need. Repayment of principal and interest begins within 60 days after the funds are disbursed. Under this program, borrowers may defer the payment of principal under certain circumstances. For instance, a parent may be eligible for an in-school deferment based on the enrollment status of the student for whom the loan was borrowed. An additional six month deferment may also be available after the student graduates, withdraws or drops below half-time enrollment. Borrowers should contact their loan holder (Direct Loan Servicing Center for Federal Direct Loans, or the lender for loans made through the Federal Family Education Loan Program) for more information.
* Before July 1, 2010, Stafford, PLUS, and Consolidation Loans were also made by private lenders under the Federal Family Education Loan Program.
To be eligible, you must:
- Be a U.S. citizen or eligible non-citizen
- Be borrowing for a dependent student who meets the eligibility criteria for the Federal Stafford Loan (for parents)
- Undergo a credit check (loans will be denied to applicants with adverse credit, as defined by federal regulations)
- Not be in default on an educational loan or owe repayment on a federal or state grant
How to Apply
The financial aid administrator at the college your student attends determines eligibility for the loan and can provide the proper application documents.
Current Interest Rate for Federal PLUS Loans
A chart, which outlines loan limits, interest rates and applicable fees in one document (for loans first disbursed on or after July 1, 2016 through June 30, 2017), is available here. Specific details regarding each of these topics are provided in the following sections.
The interest rate on Federal PLUS loans (for parents and for graduate/professional students) disbursed on or after July 1, 2016 is fixed at 6.31%.
Federal PLUS Loans disbursed through the Federal Family Education Loan Program on or after July 1, 2006 and prior to July 1, 2010 have a fixed interest rate of 8.5%.
The Federal Student Aid website provides more information about interest rates and how interest is calculated.
The annual maximum amount that can be borrowed under the Federal PLUS Loan Program is equal to the Cost of Attendance minus (-) financial aid received. There is no aggregate maximum.
Fees and Disbursements
A federally mandated loan fee of four percent is charged on loan proceeds prior to disbursement.
Loans are generally disbursed in at least two installments. Check with the financial aid office at the college to learn how the loan(s) will be disbursed.
Loan proceeds are electronically transmitted to the institution for use in paying the student's charges. If any loan funds remain after all college charges have been paid, the parent will receive the balance (unless he or she authorizes the amount to be released to the student, or transferred into the student's account at the college.) Any remaining funds must be used for the student's education expenses.
Rights and Responsibilities, Repayment, Deferments
When you borrow a Federal PLUS Loan, you should be aware of the rights and responsibilities associated with your loan.