How to Apply for a Parent PLUS Loan: What Parents Need to Know

In many cases, there’s a gap between the cost of a college and what financial aid offers. Bummer, huh?   

Direct PLUS loans are a type of federal student loan available to parents of dependent undergraduate students and independent graduate students to help pay for college-related expenses. They can bridge the gap between what your child earns in scholarships and other aid and the amount they owe. 

Direct PLUS loans and Parent PLUS loans are the same thing, which may seem confusing. However, Parent PLUS loans are only available to undergraduate students. Parents cannot take out loans for graduate students.

Let’s walk through how to apply for a Parent PLUS loan. 

Who Applies for Parent PLUS Loans?

Either parent may apply for a Parent PLUS loan, and so can an adoptive parent or stepparent. Your child must be enrolled at least half-time in an eligible program, and you and your child must be U.S. citizens or eligible non-citizens.

Understanding Parent PLUS Loans

Parent PLUS loans cover up to the cost of attendance, minus other financial aid the student receives, and you must undergo a credit check. If you have an adverse credit history, it may hamper your potential to get a Parent PLUS loan.

Parent PLUS loans are non-need based loans for parents of undergraduate students — grandparents cannot apply. (Sorry, Nonnie and Papa!) They’re also for graduate students, but we’ll focus on undergraduate students in this case.

You can borrow up to the cost of attendance at the school your child attends, minus other financial assistance your child receives. Note that you’ll get your credit checked to see if you’re creditworthy — in other words, will you repay the loan if you borrow the money?

The interest rate (the rate at which you will repay the loan) is 9.08%, which is a fixed interest rate for the life of loans disbursed on or after July 1, 2024 and before July 1, 2025. You’ll also pay a loan fee on all Parent PLUS loans, which is a percentage of the loan amount. You can tap into several repayment options.

How to Apply for a Parent PLUS Loan

Let’s walk through the steps of how to apply for a Direct Parent PLUS loan. Before you choose to move ahead with a Parent PLUS loan, note that you must repay it. 

In addition, review your credit history and determine how much you need to borrow to ensure you’re moving forward with the right option for you and your child. Then, take the following steps:

First, If you have placed a security freeze on your credit file, you must lift or remove the freeze at the credit bureaus, because your application will not go through.

Step 1: Create an FSA ID. 

So, how to apply for a FAFSA Parent PLUS loan? First, create an FSA ID and password to complete the Free Application for Federal Student Aid (FAFSA). 

Step 2: Complete the Direct PLUS application.

Next, use your own FSA ID to complete the Direct PLUS loan application, which takes about 20 minutes. You’ll need your permanent/mailing address (if different from permanent address), telephone number, email address, alien registration number (if you are an eligible non-citizen), along with the name, address and phone number of two personal references. Keep your student’s full name, SSN and date of birth and your employer name and address handy as well.

Step 3: Complete the Master Promissory Note (MPN).

If you’re approved, you’ll be presented with a Master Promissory Note that you must complete to receive your funds, which explains all of the terms and conditions of Direct PLUS Loans. It’s your legally binding agreement to repay all Direct PLUS Loans you receive under the Direct PLUS Loan MPN.

Step 4: Disbursement occurs. 

Finally, the funds get sent to your child’s school. Your child’s school will disburse the loan money by crediting it to your school account. If there is money left over, the school will pay it to you by check, or with your permission, disburse the leftover money to your child.

Step 5: Apply for Parent PLUS loans every year.

You can apply for a Parent PLUS loan during more than one of your child’s undergraduate years, but you must complete a Direct PLUS Application for each year you wish to receive a parent PLUS loan.

What Happens if You Get Denied for a Parent PLUS Loan?

It’s happened before: crushing disappointment as you realize you’ve been denied a Parent PLUS loan for your child’s education. However, there are things you can do. 

Consider obtaining an endorser (co-signer) or appealing the credit decision. You may also want to consider other alternatives, though those options may also require you to undergo a credit check.

Alternatives to Parent PLUS Loans

If you’re not sure that Parent PLUS loans are right for you (because as the parent, you’ll have to repay them), you may want to consider the following alternatives:

• Private student loans: Private student loans are loans offered by private lenders, such as banks, credit unions, or online lenders, to help cover educational expenses. Unlike federal loans, private student loans often require a credit check and may have variable interest rates and less flexible repayment options. Learn more: Private vs. Federal Student Loans for College
• Scholarships: Scholarships are everyone’s favorite! They are financial awards given to students based on academic, athletic, artistic, or other achievements, or financial need. Scholarships do not need to be repaid and are often provided by schools, private organizations, or government programs.
• Grants: Grants are financial aid provided to students, usually based on financial need, to help cover educational expenses. Like scholarships, grants do not need to be repaid and are often funded by federal or state governments, colleges, or private organizations.
• Federal student loans: While Parent PLUS loans are federal student loans, the U.S. Department of Education offers other types of loans to help students pay for college or career school, including Direct Subsidized loans and Direct Unsubsidized loans. They typically have fixed interest rates, flexible repayment options, and borrower protections such as income-driven repayment plans and loan forgiveness programs. 

Consider All the Implications Before Applying for a Parent PLUS Loan

Now that you know how to apply for a federal Direct Parent PLUS loan, should you? Learn more about how to get rid of student loans.

As the parent borrower, you’re legally responsible for repaying Parent PLUS loans, so consider your financial situation and decide whether they make sense for your situation. If you’re worried about jeopardizing your financial future, don’t borrow this type of loan. 

It’s important to recognize that this loan carries higher interest rates, no grace period, and fewer repayment options. Your loan servicer will contact you and provide regular updates on the status of your loan, and you can choose between several repayment plans, including Standard, Graduated and Extended.  

FAQs

What are the requirements for a Parent PLUS loan?

You must be the biological, adoptive or stepparent of a dependent undergraduate student. You must also be a U.S. citizen, permanent resident or other eligible non-citizen. You must not have an adverse credit history and your child must meet the general eligibility requirements for federal student aid. 

Is it hard to get approved for a Parent PLUS loan?

No, it’s not difficult to get approved, particularly if you don’t have an adverse credit history. However, do your research to ensure that the Parent PLUS loan fits your needs best. Parent PLUS loans have a relatively high interest rate compared to other types of loans.

How long does it take for a Parent PLUS loan to be approved?

The time that it takes to process a loan is contingent upon you meeting/completing all loan eligibility criteria, including the application, Master Promissory Note, credit check and U.S. citizenship status or an eligible non-citizenship status as defined by the FAFSA.