Federal Parent PLUS Loans are federal loans parents can borrow to pay for their dependent student’s educational expenses. Students must be considered a dependent by the FAFSA, be a degree-seeking undergraduate and must be enrolled at least half-time. Eligible parents who can borrow a PLUS Loan include a student’s biological parents – whether they were listed on the FAFSA or not – and stepparents whose income was reported on the FAFSA. Parents must also pass a credit check in order to be approved for this loan.
Parent PLUS Loans currently carry an origination fee of 2.5 percent. The PLUS Loan is borrowed directly from the U.S. Department of Education as part of the William D. Ford Direct Loan Program. Parents may borrow for each year of their student’s undergraduate career, though subsequent credit checks will be required.
What is the interest rate for Parent PLUS Loans?
Effective July 1, 2006, the interest rate for the Parent PLUS Loan will be fixed
at 7.9 percent.
When do parents begin repaying a Parent PLUS Loan?
Generally, repayment must begin within 60 days after the final loan disbursement
for the academic year the loan was borrowed. For most parents, this will occur
in March of the spring semester. There is no grace period for these loans. Interest
begins to accumulate at the time the first disbursement is made. Parents must
begin repaying both principal and interest while the student is in school.