Parent PLUS Loan Terms

Parent PLUS loans are simple-interest loans which are unlike credit cards, home equity loans and other loans that may compound interest. Additionally, the Parent PLUS loan terms state that:

• The standard Parent PLUS loan repayment term is usually 10 years.
• Repayment begins 60 days after the final disbursement is made.
• The interest may be tax deductible.
• The Parent PLUS loan may be repaid at any time without penalty.
• If you borrow more than one Parent PLUS loan for one child or for more than one child, you can consolidate your Parent PLUS loans into one consolidation loan and benefit from one convenient monthly payment.
• Your loan payments may be reduced or deferred in times of economic hardship.
• The loan is forgiven in the event of the death or total disability of the parent or student.

Comparing the PLUS Loan to a Private Student Loan

It is important for Parents looking to help their children finance their education to explore all options. While Federal PLUS loans have good benefits, there are instances where parents should consider co-signing on a private student loan for their children. Depending on credit strength, a private student loan could have a lower interest rate. Learn more and compare private student loans with PLUS loans.

Parent PLUS Loan Disbursement

In most cases, your loan will be disbursed in 2 installments – i.e. 2 separate payments. Neither of the installments will be greater than half of the amount of the loan. Funds from a Parent PLUS loan must first be used for fees that are owed to your school such as tuition, fees, room and board. If funds remain after these costs have been paid, you will receive the remaining balance from your school. You can also request that the school hold any unused funds for a later time during your enrollment.

Some schools will disburse the funds after 30 days of enrollment for first-time borrowers or first-year students. This provides the student an opportunity to withdraw from classes before any remaining funds are disbursed to the school.

Canceling a Parent PLUS Loan

You may cancel either a portion or all of a Federal Parent PLUS loan if you inform your school within 14 days of the date that the loan is scheduled to be deposited with your school. If you receive from your school any funds that you wish to cancel, you can refuse the funds by not signing and endorsing the check and returning it to your school.

Parent PLUS Loan Borrowing Limits

Through a Parent PLUS loan parents can borrow up to 100% of the estimated total cost of education, minus any financial aid awarded to the student. The estimated total cost of education may include tuition, books, housing (on or off campus), food, utilities, computers, lab fees and travel expenses.