When other types of financial aid are insufficient to help parents pay for their child’s education, the government offers the Parent PLUS Loan. Parents of dependent students can use this loan, which is provided by the US Department of Education, to borrow money for tuition, housing, and other educational costs.
Parents, not students, are financially responsible for Parent PLUS loans. Parents will be held accountable if the student agrees to make PLUS loan installments but does not do so on time. The PLUS loan is now known as the Grad PLUS loan or the Parent PLUS loan.
Parent PLUS Loans Application
Parents must first fill FAFSA Application Form 2025 to submit a successful application for this loan. The parent has to create or obtain their Federal Student Aid (FSA) ID after completing the FAFSA. You may access and securely handle federal loan applications with this special login and parents must use their own ID, not their child’s, to fill the form. Students can apply online at studentaid.gov, the Federal Student Aid website.
Following their login, parents should proceed to the Direct PLUS Loan Application for Parents area and fill out the necessary information about their child, themselves, and the loan amount. Additionally, the application calls for a credit check to assess Parent PLUS Loans 2025 Eligibility Requirements.
Parents who are rejected can either find an endorsement or appeal the decision, while those who are granted will go to the next round. After approval, a Master Promissory Note (MPN), a formal document outlining the loan conditions and repayment commitments, must be signed by the parent. By signing this document, the borrower attests to their understanding of their responsibilities.
The loan funds will be shared directly by the organization to cover tuition and other organization fess when the MPN is signed. Based on the disbursement option chosen during the application process, the organization will return any money left over after tuition is paid to the parent or student.
Parent PLUS Loans 2025 Eligibility Requirements
- If your dependent child is enrolled at least half-time as an undergraduate at a participating organization, you must be the child’s biological or adoptive parent. In some cases, a stepparent may be qualified to apply for this loan.
- Having “adverse credit history” is not acceptable. While a minimum credit score is not necessary, you may be disqualified if your credit report contains any negative information such as tax liens, bankruptcies, or loan defaults.
- You can still be eligible for a parent PLUS loan if you can create a co-signer with a clean credit record or if you can demonstrate that your credit issues were due to exceptional circumstances.
- While the student must be enrolled in a qualifying program and organization, the borrower must be an American or an eligible noncitizen with a SSN.
Steps to apply for a Parent PLUS Loan
Begin by FAFSA
Fill FAFSA and this is where the Parent PLUS Loan option will first show up. The goal of these loans is to strengthen current federal, state, and educational financial aid initiatives. These loans differ from federal student loans in that a credit check is performed to find any recent defaults and late payments in your credit history..
Make an online application
An online application is available for completion. Your loan repayment agreement is outlined in the Master Promissory Note (MPN), which you should download and sign. For assistance with applying or signing the MPN, please get in touch with the organization’s financial aid office.
Select the amount you wish to borrow
An added benefit for parents Loans can cover the whole cost of attendance less any financial aid your child may have received. The money goes straight to the organization, and with the consent of the parent, any extra money is returned to the parent or child. After you submit your application, the government will send the organization your information so they can calculate the maximum amount you may borrow.
Interest rates under Parent PLUS Loan
Parent PLUS loans may undoubtedly assist with college expenses, but they are subject to yearly revisions depending on 10-year Treasury rates. Additionally, from July 1, 2024, that rate will rise by 1.03%, from 8.05% to 9.08%. The rate hike is applicable to loans that are disbursed from July 1, 2024, to June 30, 2025. Once the loan is taken out, the rate is fixed, albeit it may fluctuate on July 1st of each year.
If you establish automatic monthly payments, you can qualify for a 0.25 percent discount. In contrast to federal student loans, which have annual borrowing limits, Parent PLUS Loans can cover the whole cost of attendance with less extra financial aid, even if their interest rates are higher.
When loan repayment begins
After the final disbursement for that academic year, the payback term starts sixty days later. Organization periods determine when payments are made. If you would like, you can start repaying the loan earlier because there are no prepayment penalties. You may be able to pay it off as you go, but interest accrues while the child is in organization. If your child is enrolled at least 1/2-time for each academic year, you can seek a deferment. You will have a 6 month grace period after your student graduates before you start getting money.
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Samarth Choudhary is a Chief Editor at keralacobank.com. He has overall editorial experience of 10 years in online media. He has completed his graduation from University of California and masters in Finance from University of Dallas in year 2010. His major interest and expertise is in Finance, Taxes, Government Aid and Schemes. His Major focus is to help users to get relevant information which are published on keralacobank.com in easy and precise form.