Federal PLUS Loan Features

Please note that when the term PLUS loan is mentioned on this website, it refers to the Federal Direct Parent PLUS loan. 

• The One Big Beautiful Bill (OBBB) has made significant changes to the PLUS loan program which go into effect on July 1, 2026. 
• New PLUS loans will be capped at $20,000 per student per year; existing PLUS borrowers who have borrowed for their Hampshire students before July 1, 2026 are not affected by this change for three more years or until the student's program ends.
• New PLUS borrowers will have a lifetime limit of $65,000 per dependent student.  
• Review What New Parent PLUS Loan Borrowers Need to Know
• Review What Current Parent PLUS Loan Borrowers Need to Know

Below are general features of the Federal Direct Parent PLUS Loan.  Learn more about the Federal Direct Parent PLUS loan.  

• A FAFSA form must be completed by the custodial parent(s) and the student for whom the parent is borrowing the loan. The PLUS loan is a federal loan, and the FAFSA determines if the student is eligible to receive PLUS loan funds.
• The PLUS loan is in one parent's name only. The student does not sign for the loan and is not responsible for paying it back.
• The parent borrower must be a biological or adoptive parent, or the spouse of a parent (step-parent). Both the custodial and non-custodial parent may borrow their own PLUS loan.
• The PLUS loan is canceled if the parent borrower or the student dies.
• The PLUS loan is canceled if the parent borrower becomes totally and permanently disabled.
• The PLUS loan has liberal credit terms and has no debt-to-income ratio. The parent borrower does not need to be employed to be approved, and bankruptcy is not an automatic reason for denial.
• An application is determined to have an adverse credit history and may be denied acceptance if the applicant has one or more debts with a total combined outstanding balance greater than $2,085 that is 90 or more days delinquent as of the date of the credit report, or has been placed in collection or charged off during the two years preceding the date of the credit report. The parent with this adverse credit report may petition the U.S. Department of Education documenting that extenuating circumstances existed. The parent may need to complete PLUS loan counseling offered by the U.S. Department of Education before being approved for the PLUS loan.
• If the PLUS loan is denied, the student may borrow a Federal Direct Unsubsidized student loan (up to $4,000 for first and second year students or up to $5,000 for third and fourth years). 
• The student must be a dependent of the parent borrower and must be under 24 years of age. Students 24 or older are not eligible to receive PLUS loan funds, but may borrow an unsubsidized Direct loan in the same amounts as listed above for a PLUS loan denial.
• PLUS loans are charged an origination fee of approximately four percent (4.228%). This fee is deducted from the amount borrowed.
• Loan proceeds are disbursed in two equal amounts, with one half disbursed for the fall term and the other half disbursed for the spring term. Be sure to apply for a loan for the full academic year. Avoid applying for two separate loans for the fall and spring terms. The proceeds are the net amount after the origination fee is deducted.
• Payment on a PLUS loan begins within 60 days after the loan is fully disbursed.
• For loans borrowed on or after July 1, 2008, the parent borrower may defer monthly payments while the student is enrolled and for six months after the student ceases to be enrolled at least half time. Borrowers must request this postponement option with their loan servicer. Interest is charged during this deferment period. Accrued interest can be paid monthly, quarterly, or capitalized (added to principal) quarterly.
• Other payment postponement options are available if the borrower becomes unemployed or is experiencing an economic hardship.
• PLUS loan borrowers may use the free service of the federal ombudsman to help resolve any disputes with their loan servicer.
• Prepayment of a PLUS loan is allowed without a penalty.

Please note that we monitor changes to federal aid policies and regulations that may come out of the U.S. Department of Education on a regular basis.  We strive to have the most up-to-date information on our website and we update the website when appropriate.  For the most up-to-date information about federal aid, including the PLUS loan, please visit studentaid.gov.