Parent’s Guide to PLUS Loans

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If you’re a parent of a college bound teenager, chances are likely that you’ve explored all possible options for paying for college. Whether it was looking for free money for college, looking for financial tips for your college student, or looking for advice on how to manage student loans– as parents, we tend to do quite a bit of research. My oldest, V, will not be college bound until next year, but he already has a pretty good plan in place. He wants to attend U.C. Berkeley (Cal) and is working on keeping his grades up so he can be eligible for scholarships. Which is great. Because as a parent, I really don’t want to apply for a PLUS loan. And before you consider applying for one, take a look at this parent’s guide to PLUS loans.

If you're a parent of a college bound student, you've likely looked into numerous financial options. Take a look at this guide to PLUS loans before you consider taking that route.

If your child is ready for college but needs money for tuition, he can take out a student loan.

He won’t have to repay it until he is finished with school, but even so, it can hurt his finances for many years. If you want your child to graduate without having to worry about debt, a PLUS Loan is a great way to get the money he needs.

A Parent’s Guide to PLUS Loans

PLUS Loans are available to parents of all dependent students who are enrolled at least half-time in an eligible undergraduate program at an eligible institution.

They are also available to graduate students, but undergraduates may not apply for them directly. The proceeds of the loan may be used to pay for a variety of education-related expenses, including tuition, books, supplies and housing. The applicant may borrow up to the yearly cost of attendance, minus any other financial aid received.

One of the great things about PLUS Loans is that they are not awarded according to financial need.

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The borrower will have to pass a credit check, but even credit requirements are not as strict as they are for most loans. Most parents will qualify as long as they haven’t recently undergone bankruptcy, foreclosure, repossession or a similar adverse action. If a parent cannot pass the credit check, they may still be able to get the loan by getting a co-signer or by demonstrating extenuating circumstances.

Repayment of PLUS Loans is quite flexible.

Parents may begin repayment 60 days after the funds are disbursed, or they may wait until six months after the student graduates or is no longer enrolled at least half-time. Borrowers who are having trouble repaying PLUS Loans may request a deferment or forbearance in the event of financial hardship.

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PLUS Loans once had a variable interest rate, but today the interest is fixed. An disbursement fee of up to 4% may be charged each time funds are disbursed. Late fees and collection costs may be charged if payments are not made on time.

To Recap:

  • PLUS loans are for parents
  • PLUS loans are not dependent on financial need
  • PLUS loans repayment is flexible and begins 60 days after the money is disbursed
  • PLUS Loans have a fixed interest rate

A PLUS Loan is by no means the first option that parents of college-bound students should explore.

If grants or scholarships are available, they should be pursued first, because they do not have to be repaid. But a PLUS Loan can help if these types of aid are not available to the student, or if they do not cover the entire cost of college.

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Kori

Content Creator at Kori at Home
Kori is an autistic mom who also happens to have ADHD and Anxiety. She is currently located in Albany, NY where she is raising a neurodivergent family. Her older daughter is non-speaking autistic (and also has ADHD and Anxiety) and her youngest daughter is HSP/Gifted. As an empath, HSP, and highly intuitive individual, Kori brings her own life experiences as an autistic woman combined with her adventures in momming to bring you the day-to-day of her life at home. Kori provides life coaching services for neurodivergent women (and those who identify as women) as well as Oracle card reading, Tarot card readings, and energy healing.

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