PLUS Loan Frequently Asked Questions
Student Loans from the Student Loan Network offer a variety of education loan programs for students and families, including the PLUS Loan. Below are answers to our most frequently asked questions on the PLUS Loan.
PLUS Loan Questions
- Do I need to fill out the FAFSA?
- What is the interest rate?
- What are the fees for a PLUS Loan?
- When my child is done with school, can I transfer the PLUS Loan to them?
- I'm an uncle/grandmother/friend - can I take out a PLUS Loan?
- How much can I borrow through the PLUS loan program?
- What kind of credit is required for a PLUS Loan?
- What if I am not approved for the PLUS Loan?
- Is there a cosigner release option for PLUS loans?
- I already have a PLUS Loan. How can I find out more information about it?
- When do I begin repaying a PLUS Loan?
- Can I use a Parent Plus Loan for my child's off-campus rent?
- Are there any penalties for paying the loan off early?
- Can I apply for all four years at once, or do I have to apply for a new PLUS loan every school year?
Do I need to fill out a FAFSA to get a PLUS Loan?
Typically, yes. It is not required at all schools, but it is strongly recommended. The PLUS Loan is a federal student loan and therefore must be "certified" (approved) by the college's or university's financial aid office. If your college or university requires the FAFSA for all students, they will not certify a PLUS Loan without a FAFSA Application on file. Check with your school's financial aid office on their policy.
Filing the FAFSA is a good idea anyway because you or your child may be eligible for more financial aid than you think. Filing the FAFSA does not impact your eligibility for the PLUS Loan, as the PLUS Loan is based on credit, not need.
What is the interest rate?
The interest rate for a Parent Plus loan is 7.21% fixed. Interest accrues on this loan when it is disbursed to the school. You may receive a 0.25% repayment interest rate credit when payments are set up for automatic debit from a bank account.
If you are a parent with PLUS Loans and you want to lower your monthly payments, you may consider consolidating your PLUS Loans after the final disbursement for each academic year. Click here to learn more about PLUS loan consolidation
What are the fees for a PLUS Loan?
Parents are required to pay a 3% origination fee. A federal default fee of 1% may also apply. These fees are deducted from the principal at each disbursement.
When my child is done with school, can I transfer the PLUS Loan to them?
No. The PLUS Loan is a Parent loan, taken out in the parent's name — the student is not the borrower and the loan cannot be transferred.
If, as a parent, you are interested in a loan that has such a feature, you'll need to resort to private student loans. These loans are in the student's name, and depending on the lender, may have a cosigner release option. After a certain number of consecutive on time payments, the parent (as a cosigner) can apply to be released from the loan, making it entirely the student's obligation.
I'm an uncle/grandmother/friend - can I take out a PLUS Loan?
PLUS Loans are restricted to the biological or adoptive parents, as well as stepparents of a dependent undergraduate student. As of 2000, legal guardians do not qualify as parents for federal aid purposes. Students with legal guardians and no living parents qualify as independent students and may receive increased Stafford loans. In special circumstances, financial aid administrators may issue a professional judgement override.
How much can I borrow through the PLUS loan program?
The Federal PLUS loan has an annual limit of up to the full cost of attendance (including tuition, fees, room and board, books and supplies) minus other aid received. There is no aggregate loan limit.
Families should exhaust eligibility for gift aid (money that does not need to be repaid) before relying on loans. When choosing a loan, it is best to borrow first from the Federal Stafford loan, which has a lower interest rate and fees than the Federal PLUS loan, and more flexible repayment terms.
What kind of credit is required for a PLUS Loan?
Eligibility for the PLUS Loan depends on a modest credit check that determines whether the parent has an adverse credit history. An adverse credit history is defined as being more than 90 days late on any debt or having any Title IV debt (including a debt due to grant overpayment) within the past five years subjected to default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off.
What if I am not approved for the PLUS Loan?
There are several options if you are not approved for the PLUS Loan, as some applications are declined for reasons other than poor credit. If you are declined, you can:
- Apply for a Private Student Loan
- Find an endorser (cosigner) and apply again
Is there a cosigner release option for PLUS loans?
No, federal loans do not provide cosigner/endorser release options to remove a cosigner from his or her obligation. However, if a borrower consolidates the loan, it would be considered "paid", and therefore releases the endorser from responsibility. Learn more about PLUS consolidation.
I already have a PLUS Loan. How can I find out more information about it?
You can check the status of your loans by using the National Student Loan Database System (NSLDS). You can access NSLDS for free at www.nslds.ed.gov
You will need a Federal student aid pin to access this site. If you do not know your pin you can access it at www.pin.ed.gov
When do I begin repaying a PLUS Loan?
Parents now have the choice of making payments while the student is in school or deferring payments until the student graduates. If you choose to pay after graduation, interest will accrue from the time of full disbursement. You can choose to pay the interest monthly, or you can defer both interest and principle until the student graduates. If you choose not to pay the interest monthly, it is capitalized no more than four times per year.
Can I use a Parent Plus Loan for my child's off-campus rent?
Parent Plus loans are typically used to cover the rest of tuition due after the student's aid is exhausted. The school must certify the loan amount, so if you want to borrow more than what is owed to the school you would have to check with the financial aid office at the school.
Are there any penalties for paying the loan off early?
There are never any pre-payment penalties for Parent Plus loans. If you pay the loan in full you will not be responsible for any future interest, and you will not be charged with any penalties.
Can I apply for all four years at once, or do I have to apply for a new PLUS loan every school year?
You cannot apply for all four years at once. You must apply for Parent Plus loan each school year that you wish to borrow it. If you borrow the PLUS loan for all four years of college, then you will end up with four separate Parent PLUS loans. You can choose to consolidate these together, or pay them separately. You can also consolidate your PLUS loans after each school year which would give you a lower monthly payment while your child is in school.