Essential Facts About Parent PLUS Loans


Financing a college education is expensive.

To parents and to students, language of the options available can be confusing. One option, frequently offered is the Parent PLUS loan. Simply put, this is an option that parents often use to cover the difference between what the cost is and is offered as financial aid from the school (scholarships, grants, loans and work-study opportunities, to name a few sources). Unless a school meets 100% of demonstrated need, a family can be offered a Parent PLUS loan.

This is NOT a simple solution, nor is it one to be entered into lightly. USA Today has an article ( that is one of the clearest explanations I have seen and I urge all parents considering this option to read it carefully.

Of particular note:

• The repayment of these loans is the responsibility of the PARENT. It cannot be transferred to the student. The parent is not a cosigner of these loans.

• There is no limit to the amount you can borrow. Parents may be responsible for repayment long into their retirement.

• While a credit check is required, proof of income is not. Parents may end up borrowing more money than they will ever be able to repay.

• Repayment begins almost immediately after signing for the loan.

• PLUS loans carry a higher interest rate than other federal loans.

While loans may be a necessary part of paying for college, not all loans are created equal. Informed families will be able to make better decisions for the student’s future, as well as that of the parents.