How Do Parent Student Loans Work

Last Updated on May 18, 2022

How Do Parent Student Loans Work?

Parents are often asked to loan money to their children so they can attend school. These loans are called parent student loans, or PLUS loans. They’re made through the federal government, and they allow parents to pay for their children’s education costs. The interest rates on these loans are higher than those of other types of student loans because they’re considered riskier by the government. If you want to learn more about what a parent student loan is and how it works, keep reading!

What Is a Parent Student Loan?

How Do Parent PLUS Loans Work? (And Why to Proceed with Caution) - The  Scholarship System

How Do Parent Student Loans Work

The U.S. Department of Education makes Direct PLUS Loans to eligible parents through schools participating in the Direct Loan Program. (We also offer PLUS loans for graduate or professional students.)

A Direct PLUS Loan is commonly referred to as a parent PLUS loan when made to a parent borrower.

Am I eligible for a parent PLUS loan?
To receive a parent PLUS loan, you must

be 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;

not have an adverse credit history (unless you meet certain additional requirements); and

meet the general eligibility requirements for federal student aid

Note: Grandparents (unless they have legally adopted the dependent student) and legal guardians are not eligible to receive parent PLUS loans, even if they have had primary responsibility for raising the student.

What is the current interest rate?

For Direct PLUS Loans first disbursed on or after July 1, 2021, and before July 1, 2022, the interest rate is 6.28%. This is a fixed interest rate for the life of the loan.

How much can I borrow?

The maximum PLUS loan amount you can borrow is the cost of attendance at the school your child will attend minus any other financial assistance your child receives. The cost of attendance is determined by the school.

Do I have to make payments on my loan while my child is still in school?

If you request a deferment, you will not need to make payments while your child is enrolled at least half-time and for an additional six months after your child graduates, leaves school, or drops below half-time enrollment. If the school your child is attending requires you to submit your request for a parent PLUS loan at, you’ll have the option of requesting a deferment as part of the loan request process. You can also contact your loan servicer to request a deferment.

If you do not request a deferment, you will be expected to begin making payments after the loan is fully disbursed (paid out).

During any period when you’re not required to make payments, interest will accrue on your loan. You may choose to pay the accrued interest or allow the interest to be capitalized (added to your loan principal balance) when you have to start making payments. Your loan servicer will notify you when your first payment is due.

Can I still receive a parent PLUS loan if I have an adverse credit history?

A credit check will be performed during the application process. If you have an adverse credit history, you may still receive a parent PLUS loan through one of these two options:

  1. Obtaining an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the parent PLUS loan if you do not repay it. The endorser cannot be the child on whose behalf you are borrowing.
  2. Documenting to the satisfaction of the U.S. Department of Education that there are extenuating circumstances relating to your adverse credit history.

With either option 1 or option 2, you also must complete credit counseling for parent PLUS loan borrowers.

parent plus loan eligibility

To be eligible for a Direct PLUS Loan for parents, you must be a biological or adoptive parent (or in some cases a stepparent), not have an adverse credit history, and meet the general eligibility requirements for federal student aid (which the child must meet as well).

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