When an undergraduate’s financial aid doesn’t meet the cost of attendance at a college or career school, parents may take out a Direct PLUS Loan in their name to bridge the gap.
These loans, also called Parent PLUS Loans, are available to parents when their child is enrolled at least half-time at an eligible school. Before you apply, it’s important to understand the benefits and challenges of this kind of federal student loan.
Key Points
• Parent PLUS Loans are federal loans designed to help parents pay for their child’s college education, covering tuition and other expenses.
• Parents must have a good credit history and be biologically or legally related to the student.
• Repayment begins 60 days after the final disbursement, but deferment options are available.
• The loans have fixed interest rates, which are set annually by the Department of Education.
• The maximum amount a parent can borrow is the cost of attendance minus any other financial aid the student receives. Note: Limits are changing on July 1, 2026.
A “Direct” Difference
First, to clarify, there are federally funded Direct Loans that are taken out by students themselves. Then there are federally funded Direct PLUS Loans, commonly called Parent PLUS Loans, when taken out by parents to help dependent undergrads.
To apply for a Parent PLUS Loan, students or their parents must first fill out the Free Application for Federal Student Aid (FAFSA®).
A parent applies for a PLUS Loan on the Federal Student Aid site. A credit check will be conducted to look for adverse events, but eligibility does not depend on the borrower’s credit score or debt-to-income ratio.
💡 Quick Tip: Some lenders help you pay down your student loans sooner with reward points you earn along the way.
Pros of Parent PLUS Loans
Nearly 4 million parents (and in some cases, stepparents) have taken out Parent PLUS Loans to lower the cost of college. Here are some upsides.
The Sky’s Almost the Limit
The government removed annual and lifetime borrowing limits from Parent PLUS Loans in 2013, so parents, if they qualify, can take out sizable loans up to the student’s total cost of attendance each academic year, minus any financial aid the student has qualified for.
Note that for any loans disbursed on or after July 1, 2026, new federal limits will apply. Rather than borrowing up to the cost of attendance (minus any other aid), parents can borrow $20K per year, or $65K total per student.
Fixed Rate
The interest rate is fixed for the life of the loan. That makes it easier to budget for the monthly payments.
Flexible Repayment Plans
Current options include a standard repayment plan with fixed monthly payments for 10 years, an extended repayment plan with fixed or graduated payments for 25 years, and income-based repayment plans.
• Note that as of July 1, 2026, there will only be one available repayment plan, the standard fixed repayment plan. Income-driven repayment plans will be eliminated.
More College Access
PLUS Loans can allow children from families of more limited means to attend the college of their choice.
Loan Interest May Be Deductible
You may deduct $2,500 or the amount of interest you actually paid during the year, whichever is less, if you meet income limits.
Recommended: Are Student Loans Tax Deductible?
Cons of Parent PLUS Loans
Many Parents Get in Too Deep
The program allows parents to borrow without regard to their ability to repay, and to borrow liberally, as long as they don’t have an “adverse credit history.” (If they did have a negative credit event, they may still be able to receive a PLUS Loan by filing an extenuating circumstances appeal or applying with a cosigner.)
The average Parent PLUS borrower has more than $34,000 in loans, a financial hardship for many low- and middle-income families.
And if a student drops out, parents are still on the hook.
Interest Accrual
Parent PLUS Loans are not subsidized, which means they accrue interest while your child is in school at least half-time. You’ll need to start payments after 60 days of the loan’s final disbursement, but parents can request deferment of repayment while the student is in school and for up to six months after. Interest will still accrue during that time.
Origination Fee
The government charges parents an additional fee of 4.228% of the total loan.
Fewer Repayment Options
Parents who struggle with payments typically have access only to the most expensive income-driven repayment plan, which requires them to pay 20% of their discretionary income for 25 years, with any remaining loan balance forgiven. And parents must first consolidate their original loan into a Direct Consolidation Loan.
Fewer Repayment Options
Parents who struggle with payments can switch to the income-based repayment (IBR) plan, which requires them to pay 10-15% of their discretionary income for 20-25 years, with any remaining loan balance forgiven. Parents must first consolidate their original loan into a Direct Consolidation Loan.
• Note that new Parent PLUS loans (and consolidation loans repaying Parent PLUS Lonas) issued on or after July 1, 2026, must use a standard fixed repayment plan (10–25 years, depending on loan balance). Income-driven repayment options will be eliminated for these loans. If you want to consolidate into the IBR plan, you must do so before July 1, 2026.
Options to Pay for College
Instead of PLUS Loans, private student loans may be used to fill gaps in need.
Private lenders that issue private student loans typically look at an applicant’s credit score and income and those of any cosigner. The lenders set their own interest rates, term lengths, and repayment plans. Some do not charge an origination fee.
You may want to compare annual percentage rates among lenders, and decide if a fixed or variable interest rate would be better for your financial situation.
Any time a student or parent needs to borrow money for education, a good plan is a good idea.
Sometimes scholarships can significantly reduce the amount of money that needs to be paid out of pocket for college, and personal savings and wages can also help. But it isn’t unusual for students to also need to take out loans.
💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than Federal Parent PLUS Loans. Federal PLUS Loans also come with an origination fee.
Refinancing a Parent PLUS Loan
The goal of Parent PLUS Loan refinancing is to get a lower interest rate than the federal government is charging.
And student loan refinancing may allow children to transfer PLUS Loan debt into their name.
Refinancing could potentially lower your interest rate, which gives you the option to either:
• Reduce your monthly payments
• Pay the loan off more quickly, which may allow you to pay less interest over the life of the loan
Note that Parent PLUS Loans come with certain borrower protections, like the income-based repayment option and deferment options, that you would lose if you refinanced. Also note that if you refinance with an extended term, you may pay more interest over the life of the loan.
Eligibility for refinancing Parent PLUS Loans depends on factors such as your credit history, income, employment, and educational background.
The Takeaway
Millions of parents have used Federal Parent PLUS Loans to help pay for their children’s college education. In addition to Parent PLUS Loans, students can apply for scholarships, grants, and private student loans to help pay for college.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
We’ve Got You Covered
FAQ
How does the Parent PLUS Loan work?
The Parent PLUS Loan is a federal loan option where parents borrow money to help pay for their child’s college education. It covers tuition and other education-related expenses, with eligibility based on credit history. Repayment typically begins immediately, and interest rates are fixed.
Who is responsible for paying back a Parent PLUS Loan?
The parent who takes out the Parent PLUS Loan is responsible for repaying it. While the loan helps cover the child’s education expenses, the financial obligation lies solely with the parent, not the student. Repayment begins shortly after the loan is disbursed.
How long do you have to pay back Parent PLUS Loans?
Parent PLUS Loans typically have a repayment period of 10 years, with the first payment due about 60 days after the final disbursement. However, extended repayment plans of 25 years are also an option for those with more than $30,000 in Direct Loan debt.
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