Direct Parent PLUS Loans (credit approval required)*
The Federal Direct Parent PLUS Loan is a loan option for parents with dependent students to help pay for their educational costs. Parents can borrow up to the cost of attendance minus any other financial aid the child is receiving. For instance, if the cost of attendance is $25,000 for the year and the child has a scholarship of $5,000 toward the school cost, the parent can borrow up to $20,000.
The interest rate for 2018-19 Direct PLUS Loans is a fixed rate of 7.6 percent.
Repayment of principal and interest begins 60 days after the loan is fully disbursed or parents now have the option to defer payments while their student is in school. Parents can also opt to let the interest accrue until the student leaves school; However, any interest that accrues from the date of disbursement is added to the outstanding loan balance through a process called capitalization.
Effective March 29, 2015, the duration of a credit check for Direct Plus Loan applicants will be changed from 90 days to 180 days.
Also effective March 29, 2015, a new provision requires special loan counseling for any PLUS Loan applicant who has an adverse credit history but who qualifies for a PLUS Loan through the process of reconsideration due to extenuating circumstances or by obtaining an endorser for the loan.
This counseling is mandatory; However, the Department of Education will offer voluntary counseling for all PLUS Loan borrowers. Note that this special PLUS Loan counseling is separate and distinct from the PLUS Loan entrance counseling that all graduate and professional student PLUS Loan borrowers must complete.
*A qualified PLUS Loan borrower does not have an adverse credit history (defined in regulations as being 90 days or more delinquent on any debt, or having a credit report that shows default, discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of a Title IV debt during the five years preceding the date of the credit report). Note that Direct Loans does not currently use any kind of a debt-to-income ratio or FICO® score, unlike private student loans.
Comprehensive information on these loans is available from the U.S. Department of Education.
Page last reviewed/updated 08/01/18