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Loans for Parents – Direct PLUS

//Loans for Parents – Direct PLUS

Paying for college can be daunting and stressful, but sometimes parents step in to ease the burden and help with costs. If you are a parent thinking of taking out a loan to help fund your dependent child’s education, or if you have already taken out a PLUS Loan, below is some useful information to help you better understand the PLUS Loan and what it entails.

A Direct PLUS Loan is a federal student loan available to the parents of dependent undergraduate students to help pay for the cost of college or vocational school.

To be eligible to receive a Direct PLUS Loan, you must:

• Be the biological or adoptive parent (or in some cases, the stepparent) of a dependent undergraduate student enrolled at least half-time at an eligible school;

• Not have an adverse credit history (this may not be an issue if you meet additional requirements); and

• Meet the general eligibility requirements for federal student aid (your child must also meet these same requirements).

You might be wondering if you as the parent can take out enough Direct PLUS Loans to fund your child’s entire college education. The maximum PLUS Loan amount you can borrow, however, is the cost of attendance at the school your child will attend minus any other financial assistance your child receives.

Thus, your child must first exhaust all other financial assistance before you can assist via a PLUS Loan.

Luckily, if you don’t have the funds to start paying back your PLUS Loan right away, you can request a deferment while your child is enrolled at least half-time and for an additional six months after your child graduates, leaves school, or drops below half-time enrollment.

You can either request the deferment as part of the initial application process through, or through your loan servicer.

Wondering how to take out a Direct PLUS Loan if you have a pesky adverse credit history?

You have two options.

1) obtain an endorser who does not have an adverse credit history; or

2) document to the U.S. Department of Education that there are extenuating circumstances for your adverse credit history. If you still aren’t able to receive a PLUS Loan, your child may be eligible for an increased amount of unsubsidized loans.

To apply for a Direct PLUS loan, most schools will require you to apply directly at, but keep in mind some schools may have a different process.

You can check on for a list of schools that participate in the Direct Loan Program, which will indicate whether you should apply directly through them, or if you should contact your child’s school. Before applying for the PLUS Loan, you and your child must have filled out their FAFSA form.

Keep in mind that in addition to the interest that will accrue on your PLUS Loans, which is currently 7.6%, there is also a loan fee.

The fee is a percentage of the total loan amount and is automatically deducted from each loan disbursement.

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