What is FAFSA Parent PLUS Loan? Requirement and Process

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What is FAFSA Parent PLUS Loan

The Federal Parent PLUS Loan is a type of federal student loan available to the parents of dependent undergraduate students. This loan helps parents cover the cost of their child’s education. Here’s everything you need to know about applying for and managing a Parent PLUS Loan.

Eligibility Requirements

To be eligible for 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.
  • Have a valid Social Security number.
  • Be a U.S. citizen or eligible non-citizen.
  • Not have an adverse credit history, unless you meet additional requirements.

Application Process

  1. Submit the FAFSA: Before you can apply for a Parent PLUS Loan, your child must complete the Free Application for Federal Student Aid (FAFSA) form.
  2. Log In with Your FSA ID: Parents must log in to StudentAid.gov using their own FSA ID. If you don’t have an one, you’ll need to create FSA ID.
  3. Complete the PLUS Loan Application: Select the “Apply for PLUS Loan” option and fill out the “Complete PLUS Request for Parents” form. You’ll need to provide details about the academic year, student information, and loan amount.
  4. Credit Check: Submit your application for a credit check. If approved, you’ll sign a Master Promissory Note (MPN) agreeing to the terms of the loan.
  5. Loan Disbursement: Once approved, the loan funds are sent to the school to cover tuition, fees, and other costs. Any remaining funds are disbursed to you to cover other education-related expenses​.

Interest Rates and Fees

  • Interest Rate: For the 2023-24 school year, the interest rate for Parent PLUS Loans is fixed at 8.05%.
  • Loan Fees: There is an origination fee of approximately 4.228% of the loan amount, deducted before the funds are disbursed.

Repayment Options

Repayment of a Parent PLUS Loan begins 60 days after the loan is fully disbursed, but you can request a deferment while your child is enrolled at least half-time and for six months after they graduate or drop below half-time enrollment. Standard, Graduated, and Extended Repayment Plans are available to help manage repayment based on your financial situation​​.

Loan Limits

You can borrow up to the total cost of attendance minus any other financial aid received. There is no aggregate loan limit for Parent PLUS Loans, making them a flexible option to cover educational expenses​​.

Loan Forgiveness and Discharge

Parent PLUS Loans are eligible for Public Service Loan Forgiveness (PSLF) if the parent works in a qualifying public service job and makes 120 qualifying payments under an eligible repayment plan. Loans may also be discharged in cases of death, total and permanent disability, or if the school closes while the student is enrolled​​.

FAQs

No, a Parent PLUS Loan cannot be transferred to the student. The parent borrower is responsible for repaying the loan.

If denied due to credit reasons, you can appeal the decision, obtain an endorser, or the student can receive additional unsubsidized Direct Loan funds

You can request a deferment while your child is enrolled at least half-time and for six months after they graduate. Contact your loan servicer to apply for deferment.

Yes, there is an origination fee of approximately 4.228%, which is deducted from each disbursement​

Conclusion

Parent PLUS Loans offer a valuable resource for parents looking to support their child’s higher education financially. Understanding the application process, repayment options, and eligibility criteria can help you make informed decisions and effectively manage your loan.

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