Plus Loan Overview

PLUS Loans enable parents who do not have an adverse credit history to borrow to pay the education expenses of each child who is a dependent undergraduate student enrolled at least half time. PLUS Loans are available through both the Direct Loan and FFEL programs. Most of the benefits to parent borrowers are identical in the two programs.

The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $6,000 and you receive $4,000 in other financial aid, your parents could borrow up to-but no more than-$2,000.

The interest rate could change each year of repayment, but, by law, it will never exceed 9 percent. The interest rate for PLUS Loans in repayment from July 1, 2001 to June 30, 2002, was calculated at 6.79 percent. The interest rate is adjusted each year on July 1. Interest is charged on the loan from the date that the first disbursement is made until the loan is paid in full.

Federal Plus Loan capsule:

  • Available to parents of undergraduate students.
  • As noted above, parents must be credit worthy.
  • Parents have up to 10 years to repay.
  • Payments usually begin after the first disbursement.
  • The variable interest rate is capped at 9.00%
  • Parents can borrow up to the Cost of Attendance minus any financial aid, including other loans received.

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