Parent Plus Loans: Frequently Asked Questions

New federal rules mean rates could change each year for new loans.

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Updated 8/9/2013

  1. What is a parent PLUS loan?
  2. How much can I borrow from the PLUS program?
  3. How much do PLUS loans cost?
  4. Who makes PLUS loans?
  5. How do I get a PLUS loan?
  6. Does everyone get approved for a PLUS?
  7. What happens if I get rejected for a PLUS?
  8. How is the credit crunch affecting PLUS loans?
  9. Are PLUS loan payments tax deductible?
  10. When do I have to start repaying my PLUS loan?
  11. What happens if I lose my job or get into other financial trouble?
  12. What are the advantages of a PLUS loan?
  13. What are the downsides of PLUS loans?

  14. What is a parent PLUS loan?


    A federally guaranteed parent loan that can be used to cover your child's higher education costs.
    Back to top How much can I borrow from the PLUS program?


    Each year, parents can borrow the full out-of-pocket cost of each child's annual college education. To calculate the maximum PLUS eligibility, take the college's annual cost of attendance and subtract any other financial aid, such as grants, scholarships and other federal student loans.
    Back to top How much do PLUS loans cost?


    Interest rates on parent PLUS loans are now market-based, so they will fluctuate from year to year. Once the loan is issued, however, the rate is locked in. The interest rate on PLUS loans is determined using the interest rate of the 10-year Treasury note on June 1, plus 4.6 percent. Rates for PLUS loans are capped at 10.5 percent. Taxpayers with low and middle incomes can deduct their education loan interest payments, further reducing the cost of the loan.
    Back to top Who makes PLUS loans?


    As of July 1, 2010, only the federal government makes PLUS loans. But applications are usually processed through your child's college.
    Back to top How do I get a PLUS loan?


    The first step is to call the financial aid office at your student's college.  It is not technically necessary for the parent to fill out a FAFSA, though many schools urge doing so to determine if students qualify for other aid, such as grants, scholarships or Stafford loans.
    Back to top Does everyone get approved for a PLUS?


    No. The government rejects parents who've had significant financial trouble known as adverse credit such as a recent bankruptcy or bills more than 90 days overdue. Parents can reapply if they can find a cosigner with good credit.