What is a Parent PLUS Loan, and How Does it Work?

A Parent PLUS Loan is another name for a federal Direct PLUS Loan, which is a federal loan that parents can use to help cover a dependent student’s undergraduate education costs.

A Parent PLUS Loan is one of many financial aid options that may pay for a student’s higher education, but before you get started, it’s important to understand how Parent PLUS Loans work, what qualifications you need to apply and your potential alternatives.

How does a Parent PLUS Loan work?

Parent PLUS Loans are issued by the U.S. Department of Education (ED) to the parent instead of the student. You may use them to pay for your student’s undergraduate college education, from tuition to room and board. Previously, borrowers could borrow up to the full cost of a student’s undergraduate schooling. As of July 1, 2026, however, new borrowers are limited to $20,000 per year and $65,000 total.¹

Parent PLUS Loans can fill an important gap in your student’s college funding under the right circumstances, but they come with costs and risks you shouldn’t ignore. It’s a good idea for your student to explore all of their other options, including scholarships, grants and other subsidized and unsubsidized student loans, before you consider a Parent PLUS Loan.

How do interest and fees work for Parent PLUS Loans?

When you take out a Parent PLUS Loan, the interest rate is fixed which means that it won’t change over the life of the loan. You’ll also pay a loan fee which will be deducted from the total amount you borrow.²

The current interest rate and loan fee for Parent PLUS Loans may change based on federal policies, so check StudentAid.gov for the most recent numbers.

How does the interest rate for Parent PLUS Loans compare to other types of loans?

Parent PLUS Loans have the highest interest rates of all federal student loans, which is one important reason to think through your decision with care.³ Private student loans may have lower interest rates than Parent PLUS Loans. While the interest rate on private student loans can be fixed or variable, the interest rates on parent PLUS Loans and other federal student loans are fixed.⁴

What to consider before applying for a Parent PLUS Loan

A Parent PLUS Loan could be helpful when your student’s higher education costs aren’t fully covered by other types of student aid. However, borrowing money to pay for your student’s education directly is a major financial decision that comes with serious risks. Before you decide to borrow, consider both the potential benefits and drawbacks carefully.

When a Parent PLUS Loan might make sense

• You’ve exhausted other options to pay for your student’s education.
• You’re comfortable with being responsible for repaying the loan — even if your student doesn’t complete their degree.
• You want access to certain federal student loan protections, like deferment or forbearance, which allow you to temporarily postpone payments if you meet certain eligibility requirements.⁵
• You want to borrow up to $20,000 per year (and up to $65,000 total).⁶
• You’re certain the repayment plan fits into your budget.

When a Parent PLUS Loan might not make sense

• You want to borrow more than $20,000 per year or $65,000 in total.
• You want to enroll in an income-based repayment plan, which is no longer available for new Parent PLUS Loans unless the Parent PLUS Loan is consolidated.⁷
• You want to take advantage of Public Service Loan Forgiveness (PSLF). Parent PLUS Loans are no longer eligible for PSLF. ⁸
• Taking on new debt will slow your progress toward other important financial goals, such as retirement.
• You expect a decrease in income during the term of the loan.

How do you apply for a Parent PLUS Loan?

Here are some steps to take if you choose to move forward with a parent PLUS loan.

1. Check whether you’re eligible

Before you apply, make sure you meet the federal requirements. To qualify for a Parent PLUS Loan, you must:

• Be the biological or adoptive parent of a dependent undergraduate student. If you’re a stepparent, you may also qualify. However, grandparents and legal guardians aren’t eligible to receive Parent PLUS Loans. ⁹
• Have a student enrolled at least half-time at a school that participates in the Direct Loan Program. The Direct Loan Program is a federal student loan program that allows eligible students and their parents to borrow directly from the ED.¹⁰
• Meet certain credit requirements. The ED runs a credit check on all Parent PLUS Loan applicants. If your application is initially declined due to problems with your credit, the ED website has a list of extenuating circumstances that may allow you to still receive a loan, along with the documentation you’ll need to provide. ¹¹

2. Complete the Free Application for Student Aid (FAFSA)

You and your student will need to fill out the Free Application for Federal Student Aid (FAFSA). The FAFSA is a general application that allows you to apply for several types of federal student aid at once. You should expect to spend about 30 minutes on this step.¹²

It’s usually best to complete the FAFSA as soon as possible after the form opens on October 1 to maximize your eligibility for multiple types of aid. The FAFSA must be submitted by June 30 of the following year. Some types of student aid are limited and only available until funds run out.¹³ In addition, deadlines for state financial aid programs may vary. Always check with the school your student is attending to make sure you complete the FAFSA by the proper deadlines.

To submit the FAFSA, you’ll create a Federal Student Aid (FSA) ID which is the username and password that you’ll use to access the ED online systems. Your FSA ID will also act as your signature for certain electronic forms, including the Direct PLUS Loan application.¹⁴

3. Submit your Parent PLUS Poan application

In most cases, you’ll need to apply for a Parent PLUS Loan online, which takes about 20 minutes. Before starting the application, be ready to provide information, such as:

• your verified FSA ID
• how much money you want to borrow
• the name of your student’s school
• personal information about your student and yourself
• employment information¹⁵

Some schools have their own application process. If you’re not sure how to submit your application, contact the school’s financial aid office directly.¹⁶

Your next steps if approved for a Parent PLUS Loan

Knowing what happens after you’re approved for a Parent PLUS Loan could help you feel more prepared. Here’s what to expect:

1. Sign a master promissory note (MPN)

If you’re approved for a Parent PLUS Loan, you — not your student — will be legally responsible for repaying the loan. You’ll need to sign a master promissory note (MPN), which is a legal document that explains the loan terms and conditions. When you sign the MPN, you agree to repay the loan, along with any interest and fees.¹⁷

2. The student’s school will receive funds

If you’re approved for a Parent PLUS Loan, the ED will send a lump sum of funds directly to your student’s school. The school will use the money to pay for:

• tuition
• room and board
• fees
• other school expenses

If any money is leftover, the school will give it to you, the parent, to help pay for any other education expenses for your student. Since the loan is in your name, you’ll get to decide whether to distribute the remaining money from the loan to your student.¹⁸ These funds are still considered part of the loan principal, so you must pay them back, including interest and fees.

3. Repay your Parent PLUS Loan

The ED will assign you a loan servicer, a company that will handle billing and repayment. After funds are distributed, the loan servicer will contact you with instructions for making payments.¹⁹ Typically, you must repay a Parent PLUS Loan starting either 60 days after the final loan disbursement for the academic year or six months after the student graduates or leaves school.²⁰

Repayment options for Parent PLUS Loans

If you request to defer repayment of your parent PLUS loan, you will not need to make payments while your student is enrolled at least half-time or six months after your student graduates. You can request to defer your payment during part of the loan application process.²¹ If you don’t request to defer your Parent PLUS Loan payment, repayment begins after the loan funds are sent to the school.²²

Previously, borrowers had a few choices for how much time they had to repay their loan, but as of July 1, 2026, any new loans will have to be repaid under a standard payment plan. The standard term allows:

• 10 years to repay loans under $25,000
• 15 years to repay loans between $25,000 and $50,000
• 20 years to repay loans over $50,000²³

Alternatives to Parent PLUS Loans

A Parent PLUS Loan is not your only option to pay for your student’s educational costs. Here are some other ways to pay for your student’s education:

• Scholarships and grants: Scholarships and grants are awarded by the government, your student’s school or private organizations and don’t need to be repaid. Students can check with their school’s financial aid office or the Department of Labor’s online Scholarship Finder tool to learn more about the opportunities they may qualify for and how to apply.
• Federal student loans: Federal student loans, which students can take out in their own name, have lower interest rates than Parent PLUS Loans.²⁴
• Work-study programs: The federal work-study program matches eligible students with part-time jobs related to their field of study. If eligible, students can request that the earnings be directly applied to their tuition, fees or housing costs.²⁵

Even if these alternatives don’t cover all of your student’s educational costs, they may cover a significant portion. You can also check whether a payment plan is possible for any remaining amount due. Many colleges let you spread tuition into smaller monthly installments for an up-front fee.²⁶

Is a Parent PLUS Loan the right choice for you?

Your student’s college education matters to you, but it’s crucial to think about your own financial health too. Before applying for a Parent PLUS Loan, take time to consider how it may impact your current budget.

Talk to the school’s financial aid office to make sure your student is taking advantage of any no-loan options available, such as scholarships and grants. Remember, even if you don’t choose to take out a Parent PLUS Loan, helping your student choose the right mix of financial aid resources is still a great way to offer your support.

If you do choose to move forward with a Parent PLUS Loan, make sure you understand all of the terms and can comfortably afford the payments now and in the long term.

Sources

1, https://www.nasfaa.org/uploads/documents/Federal_Student_Aid_Change_OB3.pdf
2, 5, 9, 10, 16, 18, 19, 20, 21, 22 https://studentaid.gov/understand-aid/types/loans/plus/parent
3, 24 https://studentaid.gov/understand-aid/types/loans/interest-rates
4 https://studentaid.gov/understand-aid/types/loans/federal-vs-private
6, 8, 23 https://www.bankrate.com/loans/student-loans/how-the-obbb-will-impact-parent-plus-borrowers/
7 https://studentaid.gov/announcements-events/big-updates
11 https://studentaid.gov/appeal-credit/demo
12 https://studentaid.gov/h/apply-for-aid/fafsa
13 https://studentaid.gov/apply-for-aid/fafsa/fafsa-deadlines#fafsa-deadlines-2025-26
14 https://studentaid.gov/help-center/answers/article/fsa-id
15 https://studentaid.gov/plus-app/parent/landing[MA1]
17 https://studentaid.gov/mpn/
19 https://www.consumerfinance.gov/paying-for-college/repay-student-debt/federal-parent-plus-loans/
25 https://studentaid.gov/help-center/answers/article/federal-work-study
26 https://finaid.org/financial-aid-applications/maximize/