How To Apply for a Parent PLUS Loan

If you’re a parent of a college student, you may be able to take out a parent PLUS loan from the Department of Education to help your child afford the cost of their education. Parent PLUS loans work a bit differently than other federal loans, so it helps to understand their unique terms and requirements. 

This guide will cover how to apply for a parent PLUS loan and what to do if your application is denied.

Am I eligible for a parent PLUS loan?

There are a few eligibility requirements to take out a parent PLUS loan:

• Be a parent of a dependent student enrolled at least half-time at a qualifying school for undergrad study. (This includes biological or adoptive parents, although in some cases a stepparent can also qualify.)
• Pass a credit check and have no adverse credit history (more on that below). If you do have an adverse credit history, you could still qualify by adding an endorser with good credit, or by satisfactorily documenting the reason(s) for your adverse credit.
• Meet other federal aid general requirements. This means that you're a U.S. citizen or eligible noncitizen and have a valid Social Security number, among other requirements. Your child must also meet certain conditions, including enrollment in an eligible degree program and making satisfactory academic progress.

While a credit check is required for a PLUS loan, your credit score isn't a factor. Instead, your background is checked for adverse credit, which the Department of Education defines as: 

• Owing one or more debts totaling at least $2,085 that’s at least 90 days delinquent;
• Having that amount of debt in collection or charged off in the last two years; or
• Factors like a default, repossession, tax lien, foreclosure, bankruptcy, or wage garnishment in the last five years.

Check Out: Can You Get a Student Loan With Bad Credit?

Applying for a parent PLUS loan

Eligible applicants should follow the three steps below to apply for a parent PLUS loan.

1. Fill out the FAFSA

The first step to accessing any federal financial aid, including a PLUS loan, is to fill out the Free Application for Federal Student Aid (FAFSA). Your child (the dependent student) should be the one to register for the FAFSA. They’ll be required to input their own financial information, as well as yours (their parent).

Learn More: How Does the FAFSA Work?

2. Complete the Direct PLUS Loan application 

Next, you’ll have to submit a separate application for a parent PLUS loan via the Federal Student Aid (FSA) website. You must have a verified FSA ID, and you'll provide information such as your requested loan amount, your child’s personal information and school name, as well as your own personal information and employer details. The application process should take about 20 minutes.

Once you’ve submitted the application, it’ll be sent over to your child's school for processing and approval. 

3. If approved, sign the Master Promissory Note (MPN)

The final step for approved applicants is to sign the MPN, which is a legally binding document where you agree to the loan terms. The parent borrower is responsible for signing the MPN. After that, the funds will be disbursed, typically in at least two installments to your child’s school (though any leftover funds will be paid to you or your child). 

Your loan will start accruing interest immediately and you’ll begin making payments as soon as the funds are paid out. However, you can choose to defer payments until six months after your child has left school, if you prefer.

How much can I borrow?

With a parent PLUS loan, you can borrow up to the school’s certified cost of attendance (COA), minus other financial aid your child has already received. Keep in mind that the COA doesn’t just include tuition — it also includes things like room and board, books, and fees. 

While you may be approved for a large loan, the amount that you actually borrow is up to you. It's generally wise to borrow the minimum amount necessary, as you'll have to repay it all with interest.

What to do if you’re denied

If you’re denied for a parent PLUS loan, you have a few options:

1. Get a qualified cosigner

If you aren’t able to qualify on your own, parent PLUS loans do allow for endorsers, which work the same as cosigners. The key here is to make sure your cosigner doesn’t have an adverse credit history, as defined by the Department of Education. 

Keep in mind that your cosigner will be responsible for the loan if you stop making payments. You’ll also need to complete PLUS credit counseling online if you use a cosigner. 

2. Appeal the decision

If you were denied a parent PLUS loan because of your credit history, you can request a review of the decision by filing an appeal online. This involves submitting documentation related to any extenuating circumstances that negatively impacted your credit. 

If that appeal is accepted, you’re required to complete PLUS counseling before you can receive those funds. 

3. See if the other parent can qualify instead

Another option is to have your child's other parent apply for the PLUS loan (as long as they meet the Department of Education's requirements). That way, the decision would be based on their personal credit and qualifications. If the other parent has a more favorable borrowing background, they may be able to access those funds more easily.

4. Have your child borrow more Direct Unsubsidized Loans

If you're denied a parent PLUS loan, your child may be able to increase their loan amount to cover the funding gap. Dependent students can access a higher federal borrowing limit if their parents are ineligible for PLUS loans. 

Federal loans for dependent undergraduates are typically capped anywhere between $5,500 and $7,500 per academic year, but your child may be able to borrow as much as $9,500 to $12,500 in this situation.

5. Apply for a private student loan 

If you’ve exhausted all your options, consider private student loans to cover any funding gaps. Most private lenders will let you borrow up to the school’s total cost of attendance (which includes living expenses, supplies, transportation, and more), minus any other financial aid you receive. 

Just remember that private student loans don’t have the same benefits as federal loans, such as income-driven repayment plans or loan forgiveness. 

Is a parent PLUS loan right for you?

It depends. Parent PLUS loans can be useful if the student has maxed out their federal borrowing options and still needs help paying for school, or if the parent doesn't want their child to go into debt for their degree. 

Because PLUS loans come with more relaxed credit requirements than private lenders, they can also help borrowers who otherwise wouldn't qualify for a private loan.

That said, there are some drawbacks. PLUS loans carry the highest interest rates and fees of all federal loans — and potentially even those offered by some private lenders. For the 2023-24 academic year, the interest rate for parent PLUS loans sits at 8.05%, with a 4.228% origination fee. Parents with excellent credit may qualify for a more affordable loan with private lender.

Lastly, parents are responsible for the debt when borrowing a PLUS loan. Depending on your financial situation and your retirement plan, it may not be a good time to take out a large loan on behalf of your child. In addition, parent borrowers generally have fewer options for loan assistance than a student does.

If you decide that a parent PLUS loan isn’t right for you, help your child look into other options, such as other federal loans, scholarships and grants, and private student loans. The financial aid office at your child’s school can also help point you in the right direction if you aren’t sure where to begin.

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