PLUS Loans

Parents of dependent students, who are looking for additional resources to help fund their child's educational costs, can apply for a Federal PLUS Loan to supplement the student's financial aid package.

If you're a dependent student, your parents can apply for a Federal PLUS Loan. Federal PLUS Loans cover the cost of your online bachelor's degree minus your existing aid and other financial resources. The Federal PLUS Loan offers competitive interest rates capped at a maximum of 9% and fixed for the life of the loan. Repayment of the PLUS Loan begins about two months after loan disbursement, and the responsibility of repayment falls to the parent or guardian who received the loan. 

Your school participates in one of two PLUS Loan programs. The Federal government funds the William D. Ford Direct Loan Program and acts as the lender for the duration of the loan. Under the Federal Family Education Loan Program, your parents borrow from a private lender. Regardless of the program in which your school participates, your financial aid counselor can give you more information about the loan program. 

Federal PLUS Loan Credit Check
Eligibility for a Federal PLUS Loan is based on a credit check. If your parent or guardian does not pass the standard credit check, the Federal PLUS Loan program offers free credit counseling. The program also allows your parent or guardian to obtain a Federal PLUS Loan with the help of a relative or friend who agrees to act as an 'endorser,' similar to a personal loan's co-signer. Inconsistent loan repayment will affect the credit of everyone who signed on the loan. Having a responsible repayment plan and making timely payments helps to establish good personal credit.

Parents can obtain a Federal PLUS Loan application from the financial aid office at their child's school. They will have to complete a promissory note, promising timely repayment of the loan. Depending on state and school regulations, some additional paperwork may be required for the Federal PLUS Loan. 

Before your parents apply for a PLUS Loan, talk to them about your long-term financial plans. Make sure they understand that they will have to repay the PLUS Loan whether or not you complete your degree program, and failure to repay in a timely manner will negatively affect their credit.