Parent PLUS Loans: How They Work and What to Consider

What is a Parent PLUS loan?

A Parent PLUS Loan is a federal Direct PLUS Loan that a parent can use to help cover a dependent student's undergraduate education costs. It is a credit-based federal loan available to parents of undergraduate students who are enrolled at least half-time at a participating school. The parent is the borrower, and the loan cannot be transferred to the student; the parent remains legally responsible for repayment, although the student may voluntarily make payments.

Sources: Consumer Financial Protection Bureau, Sallie Mae, OneMain Financial, MEFA

Eligibility and credit check

To qualify for a Parent PLUS loan, the borrower must be the biological or adoptive parent of the student. Stepparents listed on the FAFSA may also qualify, but grandparents and legal guardians are not eligible unless they have adopted the student. The student must be a dependent undergraduate enrolled at least half-time at a school that participates in the Direct Loan Program.

• Approval is based on the absence of an adverse credit history, not on a credit score or debt-to-income ratio.
• If denied due to adverse credit history, you may still obtain a loan by obtaining an endorser or documenting extenuating circumstances.

Sources: Sallie Mae, OneMain Financial, MEFA, CU Student Choice

Interest rates and fees for Parent PLUS loans

Parent PLUS loans disbursed between July 1, 2026, and June 30, 2027, have a fixed interest rate of 9.07% for the life of the loan. Additionally, an origination fee of 4.228% applies to loans disbursed on or after October 1, 2020. These costs are important to consider when comparing with private parent loan options.

Sources: Sallie Mae, VSAC, MEFA

How to apply for a Parent PLUS loan

Applying for a Parent PLUS loan involves several steps. First, you must submit the FAFSA to determine your child's eligibility for federal student aid. Then, you apply online at StudentAid.gov, where you will undergo a credit review. After approval, you sign a Master Promissory Note, and your child's school certifies the loan and disburses funds.

• Funds can be used for education-related costs such as tuition, fees, room and board, books, supplies, and transportation, after other financial aid is applied.

Sources: Sallie Mae, OneMain Financial

Borrowing limits

As of July 1, 2026, new Parent PLUS loan borrowers are limited to borrowing $20,000 per academic year per student, with a lifetime limit of $65,000 per student. This change was introduced by the One Big Beautiful Bill Act. Before this date, borrowers could borrow up to the cost of attendance minus other financial aid.

Sources: Iowa Student Loan Liquidity Corporation, Sallie Mae, OneMain Financial, MEFA

Repayment plans available to Parent PLUS borrowers

Repayment options depend on when your loan was first disbursed. Loans disbursed before July 1, 2026, may still be eligible for the Standard, Graduated, and Extended Repayment plans. However, for new loans disbursed on or after July 1, 2026, only the Standard Repayment Plan is available; income-driven repayment plans are no longer available. The Standard Repayment Plan has a term that may vary based on loan balance; check with your loan servicer for your specific term.

Sources: Maine Bureau of Consumer Credit Protection, Iowa Student Loan Liquidity Corporation, OneMain Financial, CU Student Choice

Deferment options

Parent PLUS loans generally have no grace period; repayment begins either 60 days after the final loan disbursement or six months after the student graduates, leaves school, or drops below half-time enrollment. However, you may request a deferment so that payments are not required while the student is enrolled at least half-time, plus a six-month post-enrollment period.

Sources: Iowa Student Loan Liquidity Corporation, VSAC, OneMain Financial

Loan forgiveness options and limitations

Parent PLUS loans can be eligible for Public Service Loan Forgiveness (PSLF), but only after the loan is consolidated into a Direct Consolidation Loan and enrolled in an income-driven repayment plan such as ICR. For loans disbursed before July 1, 2026, there was a limited window to access IBR: consolidate by June 30, 2026, and enroll between July 4, 2025, and June 30, 2028. For new loans disbursed on or after July 1, 2026, income-driven repayment plans are no longer available, which limits PSLF eligibility. The double consolidation loophole, which previously allowed access to income-driven plans like SAVE, is closed for new loans after June 30, 2026.

Sources: Maine Bureau of Consumer Credit Protection, Iowa Student Loan Liquidity Corporation, CU Student Choice

Alternatives and considerations before borrowing

Because Parent PLUS loans have a relatively high interest rate and origination fee, exploring alternatives and comparing with private parent loans is worthwhile. Private parent loans may offer lower fixed interest rates and no origination fees, particularly for creditworthy borrowers, but they come with different trade-offs.

• Refinancing a Parent PLUS loan with a private lender may result in a lower interest rate or monthly payment but results in loss of federal benefits such as flexible repayment options, forgiveness programs, and deferment/forbearance protections.
• The CFPB notes that federal direct loans are generally the better option for most student borrowers, but this may not be the case for parents considering PLUS loans.

Sources: Consumer Financial Protection Bureau, Grace College, Iowa Student Loan Liquidity Corporation, Sallie Mae, VSAC

Parent PLUS vs. private parent loans: a quick comparison

Sources: Maine Bureau of Consumer Credit Protection, Grace College, Iowa Student Loan Liquidity Corporation, Sallie Mae, VSAC, OneMain Financial, CU Student Choice, MEFA