PLUS Loan

A PLUS Loan, formally known as a Parent Loan for Undergraduate Students or a Graduate PLUS Loan, is a federal student loan available in the United States. Unlike subsidized or unsubsidized Direct Loans, PLUS Loans are not based on financial need.

Parent PLUS Loans: These loans are available to parents of dependent undergraduate students to help cover education expenses. Parents are responsible for repaying the loan. Eligibility is generally determined by a credit check. If the parent has an adverse credit history, they may still be eligible by obtaining an endorser (co-signer) or documenting extenuating circumstances. The amount a parent can borrow is capped at the student's cost of attendance, minus any other financial aid received.

Graduate PLUS Loans: These loans are available to graduate or professional students. Like Parent PLUS Loans, eligibility is determined by a credit check. The borrower is the student, and the loan amount is limited to the cost of attendance less any other financial aid received.

Key Features of PLUS Loans:

• Credit Check: Eligibility is contingent on a satisfactory credit history.
• Interest Rate: PLUS Loans typically have higher interest rates than Direct Subsidized or Unsubsidized Loans. The interest rate is fixed for the life of the loan.
• Loan Fees: Origination fees are charged on PLUS Loans.
• Repayment Options: Several repayment plans are available, including standard, graduated, extended, and income-driven repayment options. Deferment and forbearance may also be available under certain circumstances.
• Eligibility Requirements: In addition to the credit check, borrowers (both parents and graduate students) must meet general eligibility requirements for federal student aid, such as being a U.S. citizen or eligible non-citizen, having a valid Social Security number, and maintaining satisfactory academic progress.
• Borrower Responsibility: Parent PLUS loans are the responsibility of the parent borrower, not the student. Graduate PLUS loans are the responsibility of the graduate student borrower.

Comparison to Other Federal Student Loans:

Compared to Direct Subsidized Loans, PLUS Loans are not need-based and usually have higher interest rates. Unlike Direct Unsubsidized Loans, PLUS Loans require a credit check. Repayment terms and options are generally similar across different types of federal student loans.

Alternatives:

Private student loans may be an alternative option for borrowers who do not qualify for PLUS Loans or who are seeking lower interest rates (though private loans typically offer less flexible repayment options). However, federal student loans generally offer more borrower protections and benefits, such as income-driven repayment plans and loan forgiveness programs.