How to Get a Parent Plus Student Loan
- 3 min read
- A Direct Parent Plus Student Loan is designed to fill the gap between the student's other aid and the cost of schooling.
- The present interest rate for a Direct Parent Plus Student Loan is 7.9%.
Learn the 4 Qualifications for a Direct Plus Loan for Parents.
A Direct Plus Loan for Parents, sometimes called a "Parent Plus Loan," is a Direct Plus federal student loan designed for parents who want to help pay for their child's education expenses.
Apply for a Parent Plus Loan at the Dept. of Education Direct Loan Web page.
Direct Plus Loan for Parents Eligibility
According to the Dept. of Education, which disburses Direct Plus Loan funds to the student's school, there are four eligibility requirements for a Direct Plus Loan for Parents:
- "The parent borrower must be the student's biological or adoptive parent. In some cases, the student's stepparent may be eligible."
- "The student must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program. Generally, a student is considered dependent if he or she is under 24 years of age, has no dependents, and is not married, a veteran, a graduate or professional degree student, or a ward of the court."
- "The parent borrower must not have an adverse credit history (a credit check will be done). If the parent does not pass the credit check, the parent may still receive a loan if someone (such as a relative or friend who is able to pass the credit check) agrees to endorse the loan. The endorser promises to repay the loan if the parent fails to do so. The parent may also still receive a loan if he or she can demonstrate extenuating circumstances."
- "The student and parent must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the federal student aid programs."
Need a student loan? See the Bills.com resource Student Loans resource page. Problem with a student loan? Learn more about Student Loan Consolidation.
Parents must complete a Direct Plus Loan Application and Master Promissory Note (MPN), which explains the terms and conditions of the loan. A parent need sign only one MPN for loans disbursed over several academic years.
Parent Plus Loan Amount, Fees & Terms
A Direct Plus Loan for Parents is meant to make up for any difference between the cost of schooling and any financial aid the student is already receiving.
The interest rate is fixed at 7.9%, as this was written in late 2011. Interest is charged from the date of the first disbursement until the loan is paid in full. The origination fee for a Parent Plus Loan is 4% of the loan amount.
The first payment is due within 60 days after the final disbursement. According to the Dept. of Education, for Direct Plus Loans with a first disbursement date on or after July 1, 2008, the parent may defer repayment:
- "While the student on whose behalf the parent borrowed the loan is enrolled on at least a half-time basis, and"
- "For an additional six months after the student ceases to be enrolled at least half-time."
The parent repays the loan servicer listed on a disclosure statement mailed to the borrower. One important note: A Parent Plus Loan cannot be transferred to the student. The parent who borrowed the funds is responsible for repaying a Direct Plus Loan for Parents.
Parent Plus Loan Consolidation
You have options if you have a Direct Plus Loan for Parents that you cannot afford. See the Bills.com resource How to Consolidate Your Parent Plus Loan to learn more.
Because a Parent Plus Loan is federal, it is possible for Social Security to be garnished in an administrative process called "offset." How much can be taken depends on how much you earn. Although it is difficult to discharge student loan debt in a bankruptcy, it is not impossible. If you are the borrower or a cosigner, I recommend that you consult an experienced bankruptcy attorney to learn if your financial hardship makes it possible to discharge the debt in a Chapter 7 bankruptcy.