How to Apply for a Parent PLUS Loan in 6 Easy Steps

Calling all parents! Want to help your kiddo(s) pay for college by learning how to apply for a parent PLUS loan? (It’s technically called a Direct PLUS Loan. We’re using the commonly-used term “parent PLUS loan” for this post.)

Lots of parents get parent PLUS loans to help their college students pay for college. Brookings data showed that at least 3.4 million parent PLUS borrowers owe $87 billion.

The average parent PLUS loan balance is $25,600. There’s been a rise in parent borrowers over time due to:

• Increased tuition
• Borrowing cap reduction
• Regulatory changes

Interesting, huh? Now, here’s how to apply for a parent PLUS loan.

What is a Parent PLUS Loan?

Parent PLUS loans, or Direct PLUS Loans, are federal loans that parents of dependent undergraduate students can use to help pay for college or career school. The U.S. Department of Education is the lender. The current interest rate is 7.08 percent.

You must meet a few requirements to get a Parent PLUS Loan. According to studentaid.gov, you must:

• Be the biological, adoptive parent or stepparent of a dependent undergraduate student.
• Not be the grandparent or legal guardian of the student unless you’ve legally adopted your dependent student.
• Your undergraduate student must be enrolled at least half-time at an eligible school.
• You must not have an adverse credit history. That said, you can meet certain additional requirements and still be able to get a loan.
• Both you and your child must meet eligibility requirements for federal student aid.

Here’s how to apply for a parent PLUS loan in 6 easy steps. You’ll have one faster than you can say, “Happy graduation!”

Step 1: Submit the FAFSA.

First, you’ll need to fill out the application for the Free Application for Federal Student Aid (FAFSA). We’ve outlined those steps below.

1. You’ll need a few documents before you get started: Social Security numbers for parents and your student, your driver’s license number, alien registration number if you aren’t a U.S. citizen, tax returns and W-2s, information for income such as child support, interest income and more. You’ll also need statements for cash, savings, checking and investment accounts.
2. Next, you’ll need to get your FSA ID. The FSA ID is a unique username and password that confirms your identity when you sign official financial aid documents. You’ll need two separate FSA IDs — a parent FSA ID and a student FSA ID. 
3. Find “Start Here” on the official FAFSA website. Enter your student’s name, Social Security number and date of birth.
4. You can list up to 10 colleges and universities where you want the FAFSA sent. You must choose at least one. Use the Federal School Code search to identify each of the schools on your list.
5. Add legal parent(s) to the FAFSA if you’re a dependent student or add your own name if you’re filing for a dependent. 
6. The data retrieval tool (IRS DRT) takes most of the work out of filing the FAFSA. It pulls information from the IRS and prepopulates it onto your FAFSA. 
7. Go to the IRS website through the DRT and fill out your name exactly as it is on your taxes. 
8. Import your information directly onto the FAFSA form. 
9. You’ll be able to see “Transferred from the IRS” in the correct fields on your FAFSA but won’t be able to see exactly what’s in these fields. You also won’t be able to change that information. 
10. Finally, sign your FAFSA with your FSA ID. You do have the option to print, sign and mail in a signature page. Your FAFSA won’t be processed as quickly, though.

Step 2: Find out what each school’s requirements are.

Most schools require you to apply for a Direct PLUS Loan online, but some schools have different application processes. When you select your child’s school from the list, the site will tell you if the school has a different application process. Do you see that your child’s chosen school has a different process?

Check with the school’s financial aid office or contact an admission counselor at that school to find out how to request a parent PLUS loan.

Step 3: Be aware of fees and other specifics.

You can borrow the full cost of attendance at the school your child attends minus other financial assistance your child receives. Your child’s college or university can give you a PLUS loan for the full cost. It’s your legal responsibility to pay the loan — not your child’s.

Wondering about other fees? Good call. Along with the interest rate of 7.08 percent (which will remain the same until at least July 2020), you’ll also pay a loan fee. The percentage depends on when the loan is first disbursed. If the first disbursement date is on or after October 1, 2019, and before October 1, 2020, the loan fee is 4.236 percent.

Step 4: Complete the application. 

Next, you’ll need to complete the application. The information you provide will be sent to your child’s chosen school. The school you select will use the information collected to determine your eligibility for a Direct PLUS Loan and process your application.

There are four sections to the application: 

• Loan Information
• Borrower Information
• Review
• Credit Check and Submit

Remember, you must have filled out the FAFSA in order to qualify!

Step 5: Sign the Master Promissory Note.

The PLUS Master Promissory Note (MPN) is a legal document. It’s your promise that you’ll repay your federal student loan(s) and any accrued interest and fees. Most schools can offer multiple loans under one MPN for up to 10 years.

The PLUS MPN will ask you a slew of personal information, such as: 

• Social Security number
• Date of birth
• Driver’s license state and number
• Citizenship status
• Reference information (this means you should list two people who do not live with you and who have known you for at least three years.)
• Dependent undergraduate student’s full name and Social Security number

Step 6: Pay back the PLUS loan.

Yes, you’ll have to pay back the PLUS loan. But first, the PLUS loan funds will be applied to your child’s tuition, room, board and fees. Your child’s school will give you any excess money from the PLUS loan to pay other education expenses. The college may, with your authorization, give this excess money directly to your child.

There are three repayment options available:

• Standard Repayment Plan: Payments are fixed and you’ll make payments for up to 10 years (between 10 and 30 years for consolidation loans). This option requires you to pay the least amount of interest over time.
• Graduated Repayment Plan: You’ll start out with a lower payment that increases every two years. Payments are made for up to 10 years (between 10 and 30 years for consolidation loans). This is a great choice if you think you’ll be making more money later on during those 10 years.)
• Extended Repayment Plan: You’ll make fixed or graduated payments for up to 25 years. This is a great option if you need to be able to make lower payments.

Parent borrowers can also become eligible for an additional repayment plan, the Income-Contingent Repayment Plan. This means you roll it into a Direct Consolidation Loan.

Other PLUS Loan Tips

After your child receives the parent PLUS loan, you will be contacted by your loan servicer. The loan servicer will provide regular updates on the status of your parent PLUS loan.

You might also wonder if you can get your PLUS loan forgiven (canceled) at any time. It’s possible, but you’ll need to review student loan forgiveness guidelines for more information.

Finally, give yourself a pat on the back for your willingness to help your child out with his or her college education. Whether you want to help your son save money in college or help your daughter get that history degree she’s always wanted, you’re giving an amazing gift.