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  • Writer's pictureLisa Gosweiler

Parent Plus Federal Loans - How Can You Get One?

A Federal Parent PLUS Loan is a type of federal student loan that parents can take out to help pay for their dependent child's education. The requirements for taking out a Federal Parent PLUS Loan include:

  1. Eligibility: The parent must be the biological or adoptive parent of a dependent undergraduate student who is enrolled at least 1/2 time in a degree-granting program & is a US citizen or an eligible non-citizen.

  2. Credit Check: The parent borrower must pass a credit check to be eligible for a PLUS loan. They must not be in default on any federal education loans, have adverse credit history such as delinquent accounts, bankruptcy, foreclosure or tax liens. You may still be able to receive a Parent PLUS Loan with an adverse credit history if you obtain an endorser or if you can prove to the US Dept of Ed that there are extenuating circumstances related to you adverse credit history.

  3. Application: The parent borrower must complete the Free Application for Federal Student Aid (FAFSA) and apply for the PLUS loan through the Department of Education's student aid website - The dependent student for whom the parent is borrowing must also have completed the FAFSA.

  4. Loan Limit: The maximum amount a parent can borrow through a Parent PLUS Loan is the cost of attendance (COA) minus any other financial or merit aid the student has received from the college they are enrolled at.

  5. Interest Rate: The interest rate for Parent PLUS Loans is fixed for the life of the loan and determined annually by the federal government. As of 2022-2023 academic year, the interest rate is 7.54%.

  6. Loan Fees: There is an origination fee charged on each PLUS loan disbursed, which is currently 4.228% as of the 2022-2023 academic year.

  7. Other: The borrower must also sign a Master Promissory Note (MPN), which is a legal document that explains the terms and conditions of the loan and the borrower's responsibilities for repaying it.

Two things are important to note, One: the Federal Parent PLUS Loan is the responsibility of the parent borrower, not the student. Though the loan is taken out on behalf of the undergraduate student by the parent borrower - the student's name is not listed on the loan as a borrower and the parent is the only responsible party for repayment in the loan contract. The loan can be used to pay for education expenses such as tuition, room and board, books, and transportation. The second consideration is that Parent PLUS Loans can be deferred - no payment required - while the student is enrolled in college and for 6 months following the student's graduation. Loan interest will accrue from the time the loan is disbursed but no payment is required on the loan during this timeframe if the parent borrower chooses the in school deferment option.

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