In this article:
Parent PLUS loans are issued by the federal government to help offset the cost of higher education. They are given to parents (or stepparents in some cases) with children who are enrolled at least half time in a qualifying college or university. The funds can be used to pay for education expenses not covered by financial aid.
Once your student applies for assistance through the Free Application for Federal Student Aid (FAFSA) and accepts their financial aid award, you can apply for a parent PLUS loan. Your child's college or university will notify you of the next steps if you qualify.
Here's an overview of the eligibility guidelines, how to determine your loan amount, the loan application process and what to do if you're denied a parent PLUS loan.
Find Out if You're Eligible for a Parent PLUS Loan
To be eligible for a parent PLUS loan, you must meet the following criteria:
- Be the biological or adoptive parent (or stepparent in some instances) of an undergraduate student. The student must be enrolled at least half time at an eligible institution and be your dependent.
- Have a satisfactory credit history. A low credit score won't automatically disqualify you, as there is no minimum credit score requirement for parent PLUS loans. However, applicants with an adverse credit history may not qualify. This is defined as having combined debt of $2,085 or more that is over 90 days delinquent or has been charged off or placed in collections in the past two years. Loan defaults, bankruptcies, charge-offs, write-offs of federal student aid debt and wage garnishments within the past five years are also considered adverse.
- Meet the general eligibility criteria for federal student aid. Your student should be a U.S. citizen or eligible noncitizen enrolled in a degree or certificate program and demonstrate financial need.
Fill Out the FAFSA and Check Your Student Aid Award
Before you apply for a parent PLUS loan, your student needs to submit the FAFSA and receive their financial award notice. Unlike the parent PLUS loan application, the FAFSA application doesn't ask about your credit history, and there's no credit check. So, completing the FAFSA does not impact your credit score in any way.
Schools your child has been accepted to will use the information from the completed FAFSA to determine how much financial assistance your child is eligible for. If your student has been accepted to more than one school, the financial aid awarded will likely differ for each. If at that point you determine you will need more financial assistance for your child to attend the school of their choice, you can apply for a parent PLUS loan.
Keep in mind that your student will need to fill out the FAFSA for each school year, and you will need to apply for a new parent PLUS loan each school year you require it.
Determine How Much You Can Borrow
Parent PLUS loans allow you to borrow up to the cost of attendance at the college or university your child plans to attend, minus any other financial aid received. The cost of attendance includes tuition, room and board, and other educational expenses such as books. Your school will provide the cost of attendance to help you determine how much you'll need to borrow.
Because you can borrow up to the total cost of attendance doesn't mean you should, however. If you have savings, such as money in a 529 plan, or monetary gifts from your child's grandparents, for example, subtract those amounts from your financial need. Also consider additional ways your student can get money for college that can reduce your future financial burden, such as through scholarships and grants as well as working a part-time job while in school.
Fill Out and Complete Your Parent PLUS Loan Application
You can fill out and submit the direct PLUS loan application for parents through the Federal Student Aid website. Once you've applied, the application details will be forwarded to the school for processing. (If the college or university uses a different application process, you will receive an alert in the application portal.)
You will need your student's verified Federal Student Aid ID and school name to get started. The application is divided into four segments:
- Loan information: You'll enter the award year and your student's name, address, phone number, Social Security number and date of birth. In this section, you will also include the school's information, specified loan period and whether you want to defer loan payments while your student is enrolled in school and during the six-month grace period following graduation.
- Borrower information: This section asks for your citizenship status, address (mailing and permanent) and employer's information.
- Review: You will review your entries on this page and make any edits if needed.
- Credit check consent: The final page of the loan application requests your consent for a credit check. It also includes important notices and certifications you must agree to before you can submit your application.
If you have a security freeze in place on your credit report, reach out to the credit bureaus to have it lifted. Otherwise, your application cannot be processed.
Parent PLUS loan applicants must also complete a promissory note before loan proceeds are disbursed. This document outlines the terms and conditions of the loan and serves as a legally binding agreement indicating your promise to repay what you borrow. The document will be presented to you once you've completed the loan application.
What to Do if You Are Denied for a Parent PLUS Student Loan
If you are denied a parent PLUS loan due to adverse credit history, you may be eligible for reconsideration if you do one of the following:
- Get a cosigner with good credit who agrees to repay the loan if you're unable to do so.
- Document the extenuating circumstance that led to the adverse credit history to be considered for a loan.
PLUS loan credit counseling is also mandatory if you have adverse credit history and decide to get a cosigner or document extenuating circumstances to get approved for a loan.
If you are denied for a parent PLUS loan even after requesting reconsideration, you may need to consider other options. These include applying for a private student loan, or using your home equity through a cash-out refinance or home equity line of credit. Using your home as collateral can be risky, however, so weigh the pros and cons before taking this step. Having your child attend a lower-cost school or junior college at least temporarily is another way to reduce costs while you work on improving your credit and setting aside additional funds for college.
Should You Apply for a Parent PLUS Loan?
Parent PLUS loans may be a viable option if your child needs assistance covering their higher education expenses. The application process is relatively simple and you'll be able to borrow up to the cost of attendance (minus other awarded financial aid) if necessary. If you're denied due to adverse credit history, you can request to be reconsidered by adding a cosigner to your loan application or notating the reason for your credit issues. You can also take measures to improve your credit so you have more likelihood of being approved next time.
You can check your free credit score and report with Experian to see where you stand before applying. Be sure to review your report to identify areas that need improvement and give yourself the best chance at getting approved.