PLUS Loans

Parents have the option to borrow a PLUS loan to help pay for their student's education expenses if they are a dependent undergraduate student enrolled at least half time in an eligible school. To be considered for a PLUS loans students and parents must fill out the FAFSA.

General Information

The PLUS Loans are for parents of undergraduate students made through one of the two U.S. Department of Education Programs.

  1. The Ford Federal Direct Loan Program "Direct Loans," essentially the Department of Education becomes your lender.
  2. FFEL Loans or "Federal PLUS Loans," where a private institution becomes your lender usually a major bank such as Bank of America.

Generally the school has a preference between Direct Loans and FFEL Loans.

The process for obtaining these loans differs marginally between Direct Loans and FFEL Loans. For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan application and promissory note, contained in a single form that you get from your school's financial aid office.

For a FFEL PLUS Loan, your parents must complete and submit a PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.

In addition, Parents may be required to pass a credit check.

Amounts Available

The yearly limit on a PLUS loan is equal to your cost of attendance minus any other financial aid you receive.

Disbursement, Interest, and Other Fees

The Disbursement of PLUS loans are very similar to that of Stafford Loans where the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges.

If any money is left over, parents will receive the amount as a check or in cash, unless they authorize the amount to be realeased to the student.

The interest on PLUS loans are usually higher than on Stafford and Perkins Loans, but the interest cannot exceed nine percent. For 2005-06, the interest rate for loans made on or after July 1, 1998 was 6.1 percent. In addition, interest begins to accrue as soon as the loan is made.

A fee of up to 4 percent of the loan will be deducted each time a loan disbursement is made. The fees are used by the Federal government to help reduce costs of these loans.


Unlike Stafford Loans, where payment begins after a student leaves college, PLUS Loans payments begin sixty days after the first loan disbursement. Direct PLUS Loans will be paid directly to the Department of Education, and FFEL Plus Loans will be paid directly to the financial provider.