The Truth About Direct PLUS Loans for Parents

Jan 14


Milana Grade

Milana Grade

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The overview of federal plus loans for parents. Read more about these loans: details, benefits, eligibility requirements and more.


Millions of students every year aim to attend colleges or universities in order to have high chances for career opportunities and financial freedom in the future. However not all of them could afford paying for the education expenses themselves. For this reason the U.S. government help student by offering Federal student loans under Direct loan program that include: Stafford,The Truth About Direct PLUS Loans for Parents Articles Perkins and PLUS loans.

Advantages and Disadvantages of PLUS Loans

Federal PLUS loans can be received in one of two forms: PLUS loans for parents or PLUS loans for graduate students. Both PLUS loans, as the type of federal financial aid, have own advantages and disadvantages. First, PLUS loans differ from other federal loans including Stafford and Perkins loans.

In comparison with other two types which are need-based loans, PLUS loans (for parents and graduates) are dealing with creditworthiness of potential borrowers. It means that if a borrower want to qualify for this type of loan it's necessary to have high income and do not have an adverse credit history. If borrowers have financial problems and have no opportunity to meet these requirements (high income and good credit score) they have to have a credit-worthy cosigner.

A credit-worthy cosigner will be responsible for the borrower and must have high income and good credit history. If a cosigner doesn't have it – he is not credit-worthy. And in the end the borrower will not qualify for the loan and his application will be denied.

However as federal student loans PLUS loans have major advantage. PLUS loans are low-interest loans. The truth is all federal loans for students are low-income and can be considered as cheap financial aid from the government.

PLUS Loans For Parents

The most important theme of Parent PLUS loans is eligibility requirements. It's important to meet requirements because if this topic will be skipped borrowers will not qualify and waste their time. Here are essential requirements for parents:

• Parent borrowers must be biological parents.

• Parent borrowers must have good credit history.

• Parent borrowers and dependent students must be U.S. citizens.

The process of applying for Parent PLUS loans is simple as 1-2-3. Apply by submitting a Free Application for Federal Student Aid (FAFSA). A borrower can do it by applying using web or by mail. It's important to know that a borrower will also complete Master Promissory Note (also called MPN).

This document is a legal document covering responsibilities of borrowers. It could be considered as a contract between a lender and a borrower in which a borrower is taking responsibility for paying the loan back. In fact, by signing this document a borrower agrees to repay the loan regardless of anything that could happen in life.


As it was described PLUS loans are cheap loans and can be considered as low-income college funding source. The interest is fixed and equals 7,9%. The repayment period is up to 25 years. It makes this student aid option comfortable for youth.

However it's necessary to take into consideration that if for some reason a borrower face huge trouble and could not repay the loan – the loan can be canceled. This can happen only in certain circumstances.

People realize the importance of education in the modern time. There are different college funding source available and federal financial aid could be considered as the best one. And PLUS loans are great funding option for graduate students or parents who want to help their child cover education costs.