How Does a Parent Plus Loan Work?

If you’re the parent of a college student and are looking to help them finance their education, you may be wondering how a Parent Plus Loan works. Here’s a quick overview of how these loans work and what you need to know before you apply.

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Introduction

Parent PLUS loans are federal loans that parents and stepparents can use to help pay for their dependent student’s undergraduate education.

To apply for a Parent PLUS loan, the parent or stepparent must first complete the Free Application for Federal Student Aid (FAFSA®) form. If the dependent student is also applying for financial aid, the student should complete the FAFSA form first, and then the parent can complete the Parent PLUS loan application.

Parent PLUS loan borrowers are required to complete entrance counseling to understand their responsibilities regarding the repayment of their loan. After the student enrolls at least half-time in an eligible program at an eligible school, the school will notify the Department of Education that the student has met this requirement and arrange for the first disbursement of Direct PLUS Loan funds.

Types of Parent Plus Loans

There are two types of Parent Plus Loans: the Direct Parent Plus Loan and the Parent Plus Loan. The Direct Parent Plus Loan is a federal loan program that allows parents to borrow money for their child’s education. The Parent Plus Loan is a private loan program that allows parents to borrow money for their child’s education.

Applying for a Parent Plus Loan

To apply for a Parent PLUS Loan, you will need to complete a Free Application for Federal Student Aid (FAFSA®) form. Be sure to include your parent’s information on the form.

If you are eligible for a Parent PLUS Loan, your school will send you a loan offer. To accept the loan, your parent will need to complete a Master Promissory Note (MPN).

Your parent can apply for a Parent PLUS Loan at studentloans.gov.

Repaying a Parent Plus Loan

Repaying a Parent PLUS Loans is different from repaying other federal student loans. For one, you are responsible for all interest that accrues on the loan from the time it’s first disbursed. This can be an shock to some borrowers, as other federal loans don’t begin to accrue interest until after you graduate.

Additionally, you cannot have any repayment deferments or forbearances on a Parent PLUS Loan—you must begin making payments 60 days after the loan is fully disbursed. (There is one exception: If you consolidate your Parent PLUS Loan into a Direct Consolidation Loan, you may be able to obtain a deferment for the first six months after consolidation.)

If you’re having trouble making your monthly payments, contact your loan servicer right away to discuss your options. You might be able to extend your repayment term or lower your monthly payment by consolidating your Parent PLUS Loans into a Direct Consolidation Loan.

Parent Plus Loan Forgiveness

TheParent Plus Loan Forgiveness program is a federal government program that forgives the debt of parents who have co-signed for their child’s student loans. The program is designed to help parents who are struggling to repay their loans, and it can forgiven up to $17,500 of debt. Parent Plus Loans that are not forgiven under this program may still be eligible for other forms of loan forgiveness, such as the Public Service Loan Forgiveness Program.