The Parent PLUS Loan is a student loan that is sponsored by the federal government. Parent PLUS Loans enable parents to borrow money to pay the education expenses of their child who is a dependent undergraduate student.

Parent PLUS loans are given to parents with good credit histories. Interest rates are fixed and repayment begins after the 2nd disbursement.

Am I Eligible?:

-Good Credit: Parents taking out this loan must have good credit.

-Half-Time Enrollment: You are required to be enrolled in an approved college or university no less than half time. This generally means you are taking at least 6 credit hours each semester.

-Submit a FAFSA: Typically, you are required to complete the Free Application for Federal Student Aid, however, some schools do not require this. Check with your school's financial aid office to see if yours does.

-US citizen: You must either be a US citizen or permanent resident. You can also be from American Samoa or Swain's Island.

What's so Good About a Parent PLUS Loan?:

-The best benefit is that parents are able to borrow money to assist their child in financing their higher education.

-Parent PLUS loans have federally guaranteed low interest. The current interest rate (as of July 1, 2006) is 8.5%.

-No collateral necessary.

-It's not based on income but on credit history. You can't be turned down for making too much money.

-You can borrow funds to cover such things as tuition, housing, meals, books and supplies.

-Interest may be tax deductible.

How Much Can I Borrow?:

The amount of money you can borrow depends on what it costs you to go to school and how much other financial aid you are receiving. For example, if it costs you $8,000 per year to attend school and you have $2,000 in financial aid, the most your parents can borrow is $6,000.

The money is given directly to your school. It's disbursed in no less than two installments and used to pay for tuition, fees, and room and board. If there is any money left over mailed to your parents and it must be used for your education.

Repaying Your Parent PLUS Loan:

Parent PLUS loans must be repaid in less than 10 years. If you need to extend your repayment terms, consolidation is your only option.

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