PLUS Loans: FAQ

How are PLUS loans different from Stafford loans?

  • Borrower: Both loans are federally guaranteed by the U.S. Department of Education, but PLUS loans are made to the parents of dependent undergraduates, while Stafford loans are made directly to the student in his or her name.
  • Interest rates: PLUS parent loans carry a fixed interest rate of 7.9%, while Stafford student loans top out at fixed rates of 6.8%.
  • Repayment: Repayment on PLUS parent loans begins within 60 days of final disbursement. However, parents may choose to defer making payments until after their child’s graduation, just as students may do on their Stafford student loans.
  • Loan Amounts: Parents can borrow up to 100% of college education costs through PLUS loans, including room and board, books, and tuition. Federal Stafford student loans are capped at specific dollar amounts depending on the student’s year in school and dependency status.

Is there a credit check required for federal PLUS loans?

Yes, parents must pass a modest credit check to meet federal PLUS guidelines for creditworthiness. These guidelines for federal parent loans are generally much less stringent than for other types of consumer credit, such as home equity loans, credit cards, and private student loans.

How much does a PLUS parent loan cost?

The Federal PLUS loan for parents carries a 3% government origination fee and a 1% guarantee fee, which may be waived by the guarantor. Fees are taken out of the out of the proceeds of the loan, so there’s no upfront money required to obtain a PLUS loan.

How are PLUS loan funds disbursed?

The funds will be distributed directly to your child’s school financial aid office for scheduled payments over the course of the academic year. All federal education loans have at least two disbursements, typically one for each school term. At most schools, the last disbursement for an academic year will take place in January, with repayment on a PLUS parent loan normally starting between February and March, unless you choose to defer your payments until your student has graduated or left school.

Apply for a PLUS parent loan

 

Quick Links

» Apply for a PLUS parent loan
» PLUS parent loans: Overview
» Eligibility for PLUS parent loans
» PLUS loan amounts
» PLUS loan rates, fees, and terms