Federal PLUS Loan Features

Below are the features of the Federal PLUS Loan: 

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

  • A parent may borrow a PLUS loan up to the cost of attending college less any financial aid received including other loans. There is no aggregate limit.
  • 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 an unsubsidized Direct 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.
  • Direct PLUS loans borrowed on or after July 1, 2023 through June 30, 2024, have a FIXED interest rate of 8.05 percent (8.05%).
  • PLUS loans disbursed PRIOR to July 1, 2006, have a variable interest rate. The variable interest rate changes annually on July 1. The variable rate will not exceed nine percent. The variable interest rate may be replaced with a FIXED interest rate through loan consolidation
  • PLUS loans are charged an origination fee of approximately four percent. 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.
  • For loans borrowed prior to July 1, 2008, the parent borrower may defer monthly payments while the student is enrolled. Borrowers must apply for the forbearance each year through their loan servicer. Realize that interest is charged during a forbearance.
  • Other payment postponement options are available if the borrower becomes unemployed or is experiencing an economic hardship.
  • The repayment term is 10 years. A 25-year repayment term is available if the borrower has borrowed $30,000 or more. The $30,000 can be either all in one loan or the total aggregate, but must be with the same lender.
  • Longer repayment terms are available if the PLUS loan is refinanced through loan consolidation. A consolidated PLUS loan has a repayment term of 10, 12, 15, 20, 25, or 30 years, depending on the amount refinanced.
  • If PLUS loans are consolidated with the Direct Loan Program, the borrower may be eligible for the Public Service Loan Forgiveness Program.
  • 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.