PLUS loan is a federal Direct Loan available to graduate or professional students (Grad PLUS) and to parents of dependent undergraduate students (Parent PLUS).
How it works
The borrower completes a PLUS application and master promissory note and undergoes a credit check. If approved, the institution certifies the amount up to the cost-of-attendance limit. Funds are disbursed to the student’s account (or, for Parent PLUS, according to the parent’s choice). Credit balances are refunded according to federal rules. Repayment terms, including income-driven options for Grad PLUS, are managed by the loan servicer.
Example: a dependent undergraduate’s cost of attendance is $30,000 and other aid totals $15,000. A parent may borrow up to $15,000 in Parent PLUS. If the parent is denied, the student may become eligible for additional unsubsidized loan amounts at the independent-student level.
How it differs
Subsidized and unsubsidized Direct Loans have fixed annual limits and, for subsidized loans, an interest subsidy. PLUS loans have no fixed dollar cap other than cost of attendance and require a credit check. Private loans are not federal and do not carry the same repayment or forgiveness options.
Common errors
Assuming a Parent PLUS denial automatically increases the student’s unsubsidized limit without institutional certification. Treating Grad PLUS as available to undergraduates. Expecting PLUS loans to be interest-free during enrollment.
References
- 1. Federal Student Aid PLUS LoansParent and graduate options
- 2. 34 CFR 685.200 PLUS eligibilityCredit check requirement
PLUS loan is a federal Direct Loan available to graduate or professional students (Grad PLUS) and to parents of dependent undergraduate students (Parent PLUS).