How To Accept A Parent Plus Loan?

Parent plus loans are a type of student loans, but granted to parents wishing to pay for their children’s undergraduate tuition fees.

Higher education is more expensive than you think; people use their entire life’s savings to fund the education of their child. And there are some people who don’t have that kind of money; not as earnings and definitely not as their savings.

These are the people who resort to student loans granted by the government to fund their education. Student loans are given to students and they are to be paid for a specific term- like 10+ years (principal amount with interest). A parent plus loan is given to parents to fund their child’s higher education.

Let’s get into more detail of what a parent plus loan is and how to accept it.

Parent Plus Loan Definition

A parent plus loan is granted to the parent by the federal government, these are used to fund the education of undergraduate students. PLUS is short for Parent Loans for Undergraduate Students, and are also referred to as direct plus loans.

Parent plus loans allow you to borrow the full cost of the education, after subtracting any other sources of financial aid too. But the full amount can also be borrowed if there are no other financial aid sources, like a financial gift deed, sponsorship or even a generous friend willing to help.

The repayment plan often starts as soon as the student is enrolled at the university, and no matter if they dropped out during the degree or whatever the case, the loan has to be paid according to the repayment schedule decided at the time.

Parent Plus Loan Interest Rate

The interest rate for parent plus loans for the academic year of 2020-2021 is 5.30%. This has come down from a sharp 7.08% since last year due to the coronavirus pandemic. This interest rate is always fixed for the entire term of the loan, so you don’t have to worry about it spiking up as each year passes by.

The procedure of accepting the loan is simple: the money first goes to the university the student is enrolled in, and they cut tuition, accommodation and other fees from the fund. Any remaining amount is given to the parent or student to use during their time at the institution.

Parent Plus Loan Eligibility

The eligibility criteria to receive a parent plus loan is fairly simple; the institution of education should be recognized by the Federal government and The US Department of Education. You’re eligible for the loan if:

  • You are 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
  • You don’t have an adverse credit history
  • You meet the general eligibility criteria of the Federal Student Aid

Unless grandparents have legally adopted the child, they CANNOT receive the parent plus loan, even if they spent their lives raising the child. This is just one criteria part where most grandparents may not be eligible for a parent plus loan.

Parent Plus Loan Calculator

A parent plus loan calculator tells you how much money you should borrow, and according to the interest rate how many monthly payments you will have to make. The calculator enters all relevant data like the interest rate, loan amount, origination fee, number of years etc. and then runs through the algorithm to display a close to accurate amount of what you should be expecting.

Running the numbers at your own end is helpful because it generally gives you an idea of what you need to expect when it comes to parent plus loans. If you’re able to afford the monthly payments against your income, then it is probably best. But if not, you could look for ways of reducing the income by borrowing less loan id you have another source of aid like a financial gift deed etc.


A parent plus loan is an excellent way to help your child through college if you don’t have enough savings, but like every other loan, this one also comes with a fixed rate of interest that is to be paid for a specific amount of years.

College education has become super necessary for students these days and it is often not possible without an external source of aid. The government has given open access for people to apply for student loans and parent plus loans in order to pay for their education; but the interest rate of 5.30% makes it very hard for people to pay it back.

If a person is unable to pay their parent plus loan back in time, then the government can seize their wages and take their tax refunds and Social Security checks, among other consequences. Defaulted loans also aren’t eligible for different repayment plans, or deferment or forbearance. This generally takes a hit on the person’s credit rating too, making it hard for people to often bounce back from financial setbacks.

Tony Bennett

Tony Bennett

Tony Benett makes his living in the insurance industry by teaching and consulting. He is also recognized by the legal profession as an expert on insurance coverages. His insurance experience includes having worked at the company level, owned an independent general agency and having worked for an insurance association. He has received various certificates over the past few years and helps his clients and readers by giving them a realistic outlook on what they can expect to achieve within their set targets. At Insurance Noon, he is known for his in-depth analysis and attention to details with accuracy. He has been published as one of the most referred agents by his peers in the insurance community. Tony loves the outdoors and most sport events. His passion other than providing excellent advice is playing golf.

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