The average college graduate walks away with over $37,000 in student loan debt. That loan balance can have a significant impact on graduates’ lives, making it difficult to afford the essentials or pursue their goals.
With that in mind, it’s no wonder parents want to help their children pay for school.
If you’re shopping for loans, Parent PLUS Loans are among the best options available. They have lower interest rates, more generous repayment terms, and more protections than private parent loans.
If you’ve decided a Parent PLUS Loan is right for you, here’s what you need to know to complete the application process.
Who is eligible for Parent PLUS Loans?
To be eligible for a Parent PLUS Loan, you must meet the following criteria:
You must be the biological or adoptive parent of the student.
Your child must be a dependent enrolled at least half time in an undergraduate program.
You can’t have an adverse credit history.
How to apply for Parent PLUS Loans in 5 steps
Once you’ve determined that you’re eligible for Parent PLUS Loans, you can complete the application process in five easy steps.
1. Complete the Free Application for Federal Student Aid
First, your child — or you on your child’s behalf — must complete the Free Application for Federal Student Aid (FAFSA). The government and schools use the FAFSA to determine your child’s eligibility for student aid.
Depending on your financial situation and family size, your child could qualify for grants, Direct Loans, and other forms of aid. Direct Loans can be more cost-effective than Parent PLUS Loans. They have lower interest rates, and the government pays the interest that accrues on Direct Subsidized Loans while your child is in school.
It’s a good idea to exhaust those options before moving forward with your Parent PLUS Loan application.
2. Figure out if you’ll need an endorser
If you have an adverse credit history, you won’t qualify for Parent PLUS Loans on your own. According to the Office of Federal Student Aid, you’re considered to have an adverse credit history if one of the following is true:
You have one or more forms of debt with an outstanding balance of $2,085 or more that are 90 days or more delinquent or have been placed in collections.
You have been subject to one or more of the following in the past five years:
Discharge of debt in bankruptcy
Write-off of federal student aid debt
With an adverse credit history, you might be able to qualify for a loan if you have an endorser. An endorser — typically a friend or relative with stable income and good credit — acts as a guarantor on the loan. If you fall behind on your payments, the endorser is responsible for making them instead.
3. Fill out the Parent PLUS Loan application
To fill out the Parent PLUS Loan application, visit StudentLoans.gov and log in using your FSA ID. Once you’ve signed in, select the Direct PLUS Loan application for parents and click “start.”
The application will ask for your child’s name, address, phone number, and Social Security number. It also will ask for your employer information and mailing address.
Once you’ve completed the basic section, you’ll need to make decisions in the following four areas.
The application will prompt you to decide if you’d like to request a deferment while your child is in school.
If you request a deferment, you won’t have to make payments as long as your child is enrolled at least half time. However, interest will continue to accrue while the loan is in deferment. If you decide not to opt for a deferment, payments will be due within 60 days of the last disbursal of the loan.
Grace period deferment
Next, the application will ask you if you’d like to defer loan payments for an additional six months after your child ceases to be enrolled at least half time.
Interest will continue to accrue during this six-month deferment, commonly known as a grace period. If you don’t select the six-month deferment, payments on the loan will be due within 60 days of your child no longer attending school at least half time.
Credit balance option
The government will apply the Parent PLUS Loan to the student’s school account to cover the cost of tuition, fees, and room and board. If any money is left over, it will be credited to your account. You can choose to have the credit balance sent to you or your child.
Loan amount requested
You can request a certain amount you’d like to borrow, or you can request the maximum you’re eligible for as determined by the school.
4. If necessary, ask your endorser to complete the addendum
When you submit the application, the government will perform a credit check and deny or approve you based on that information. If you’re denied, you might be able to qualify for a loan with an endorser.
If you choose to use an endorser, they can complete the endorser addendum electronically or print and fill it out. If your endorser opts for a hard copy, ask them to mail it to the following address:
U.S. Department of Education
P.O. Box 9002
Niagara Falls, NY 14302
5. Complete the Direct PLUS Loan Master Promissory Note
Once you’ve finished the application, you must complete the Direct PLUS Loan Master Promissory Note (MPN). The MPN covers the terms and conditions of the loan and is a legally binding agreement between you and the government that you will repay the loan.
You can complete the MPN online.
Financing your child’s education
When you consider your financing options for your child’s schooling, Parent PLUS Loans are often the best choice.
However, if you have great credit, private student loans might offer lower interest rates than federal loans. It’s a good idea to research and compare rates from private student loan lenders to ensure you’re getting the best deal.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.23% – 13.23%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 10.11%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|