All About the Parent Loan for Undergraduate Students (PLUS)

The Parent Loan for Undergraduate Students, or PLUS for short is a type of federal loan that can make a significant impact on your overall education budget. So much emphasis is placed on the student and how they will fund their college education, but many parents have a genuine concern about helping their children achieve this major goal. That’s where the PLUS loan comes in.

The Federal PLUS Loan acts as a means for parents to contribute to their child’s education fund without breaking the bank. In fact, as with all federal loans, the PLUS loan is guaranteed and offers a very low interest rate. Parents can borrow money to help pay for their child’s education that is equal to the total amount needed to pay for tuition and other expenses, after all other financial aid has been taken into consideration.

Am I Eligible for the PLUS Loan?

There are a few basic requirements for the PLUS Loan that must be met before you can be considered for financial aid. The standard eligibility requirements include:

  • Filing the FAFSA. In order to be considered for any federal financial aid, you will need to have submitted the FAFSA before March 2. This is the be all and end all of financial aid applications because it puts you in the “pot” so to speak for every federal aid option. If you fail to complete this step, you will not qualify for the PLUS Loan.
  • Decent credit. Having good credit is also a requirement for getting a PLUS Loan. Now, you don’t have to have stellar credit, but you can’t have adverse credit, which means you can’t have filed for bankruptcy, have been late on a payment for over 90 days or have a Title IV debt. Basically, if you have paid your bills on time, you should be fine.
  • Half-time enrollment. The undergraduate student must be enrolled at least half-time and maintain that level of enrollment throughout their college career.
  • Attendance at a qualifying school. Not all colleges and university accept the PLUS Loan program. Most do, but some do not. Make sure you check with your school of choice before you go relying on the PLUS Loan!
  • U.S. citizenship. As with all federal aid, you need to be a U.S. citizen or permanent resident to qualify for a Federal PLUS Loan.

What Are the Benefits of this Loan Program?

Besides what I’ve already mentioned such as a low interest rate and flexible repayment plans, the PLUS Loan also offers several other benefits to borrowers.

  • You do not need collateral to get a Federal PLUS Loan.
  • The interest rate is always fixed at somewhere around 8.5%.
  • You can borrow up to the whole cost of education less any other financial aid received.
  • While PLUS Loans are unsubsidized, you don’t have to make a single payment while your child is in school.
  • Your dependent undergraduate student does not have to worry about the burden of paying back a loan right after college.

The Federal PLUS Loan is a terrific option for paying for college for your dependent child. It is definitely better than turning to a private lender and you can save a lot of money in the long run due to the fixed low interest rate and the low or no fees attached to the loan. The point is, rather than dealing with your bank, deal directly with the government. A Federal PLUS Loan along with other financial aid such as the Federal Stafford Loan can make college accessible for all.