PLUS Loans to meet students’ education costs are available through the FFEL and Direct Loan programs. Parents who have an acceptable credit history can borrow a PLUS Loan to pay the education expenses of a child who is a dependent student enrolled at least half time in an eligible program at an eligible school. (Click here for a discussion of dependency status.)

How Do My Parents Get a Loan?
For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan application and promissory note, contained in a single form you’ll get from your school’s financial aid office.

For a FFEL PLUS Loan, your parents must complete and submit a PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.

To be eligible to receive a PLUS Loan, your parents generally will be required to pass a credit check. A parent can’t be turned down for having no credit history— only for having an adverse one. If your parents don’t pass the credit check, they may still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan. An endorser promises to repay the loan if your parents fail to do so. Your parents may also qualify for a loan without passing the credit check if they can demonstrate that extenuating circumstances exist. You and your parents must also meet other general eligibility requirements for federal student financial aid.

How Much Can My Parents Borrow?
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. If your cost of attendance is $6,000, for example, and you receive $4,000 in other financial aid, your parents may borrow up to $2,000.

Who Gets My Parents’ Loan Money?
Your school will receive the money in at least two installments and will make at least two disbursements. No disbursement will be greater than half the loan amount.

Your school might require your parents to endorse a disbursement check and send it back to the school. The school will then apply the money to your tuition and fees, room and board, and other school charges. If any loan money remains, your parents will receive the amount as a check or in cash, unless they authorize that it be released to you. Any remaining loan money must be used for your education expenses.

What’s the Interest Rate?
The interest rate is variable (adjusted annually) but does not exceed 9 percent. For the 2004-2005 award year, the interest rate for PLUS Loans in repayment was 4.17 percent. The interest rate is adjusted each year on July 1. Your parents will be notified of interest rate changes throughout the life of their loan. Interest is charged on the loan from the date of the first disbursement until the loan is paid.

When Do My Parents Begin Repaying the Loan?
Generally, the first payment is due within 60 days after the loan is fully disbursed. There is no grace period for these loans. Interest begins to accumulate at the time the first disbursement is made, so your parents will begin repaying both the principal and interest while you’re in school.