What Is a Parent PLUS Loan?
As we explained above, a Parent PLUS loan is a special type of college loan that’s issued to parents. If
you’re looking for ways to finance your child’s education, then a parent PLUS loan may be a good option to
consider. However, keep in mind that the Parent PLUS loans come with fees, unlike private loans
banks and private lenders. That is because these federal loans offer benefits in terms of easier repayment
and forgiveness plans. You need to think carefully before deciding between a federal Parent PLUS loan and a private
- Don’t take out a federal Parent PLUS loan if:
- Your financial situation is solid and you’re able to work during the entire loan term. If this is the
case, then a private loan is a better option because you will get lower interest rates and thus spend less
- Your child hasn’t yet maxed out their federal student loan options. Go for the student loans first and,
if those aren’t enough to cover the expenses, then look into the Parent PLUS.
- If you have high-interest debt such as credit cards that you need to repay, then taking out a federal
loan may not be the best option for you.
- Take out the parent PLUS loan if:
- You’re not sure whether you will be able to work and have a steady income during the entirety of the
loan term. In this case, a federal loan is a good option because it gives you a safety net in case you’re
unable to make the payments.
- If you don’t meet the private loan requirements, that is, if your credit score is not good enough to
qualify for a private loan, then you may be able to get a federal loan instead.
- If you are building your finances and don't meet private loan requirements, a PLUS loan is likely best
for you as they don't have strict credit requirements.
Are You Eligible for a Parent PLUS Loan?
Unlike private loans, federal loans don’t have a credit score requirement, which makes it much easier to
qualify. However, you still have to pass the credit check to make sure you don’t have an adverse credit
history, meaning you don’t have any negative line items on your credit report (payments that are 90 days
late or more).
- Other requirements include the following:
- You must be a parent.
- Your child must be an undergraduate.
- Both you and the student must be eligible for federal aid.
How to Apply for a Parent Loan?
Applying for a parent loan includes one additional step compared to regular student loan applications.
First, you need to submit the Free Application for Federal Student Aid, known as
FAFSA. Then, contact the
child’s school to get further instructions, as the process may differ depending on the college procedures.
In most cases, you will have to apply for a PLUS loan on studentloans.gov.
Go through the required credit check and make sure all your credit freezes are lifted before you initiate
this process. Then proceed to submit your documentation on studentloans.gov and wait to hear back from them.
If your documentation checks out, you’ll be good to go. The approval process can take anywhere up to four
weeks. Keep in mind that the application may differ depending on the school but, in most cases, you will be
able to submit it online without much hassle.