What is a Parent PLUS loan?

Parent PLUS loan explained

Parent PLUS loans are different from classic Stafford education loans (made to students) because they are made to the parents of students. PLUS (originally an acronym for Parent Loan for Undergraduate Students) loans have different terms than Stafford, Perkins, and most ther available federally sponsored student loans. They also have some similarities.

For example, all are authorized by Title IV of the Higher Education Act of 1965. Stafford, Perkins, and PLUS loans are available through the Federal Direct Student Loan Program or through a variety of private student loan companies.

Like Stafford loans, they can be consolidated when the parent is ready to begin repayment after students complete their studies.

Their differences are significant. Unlike Stafford or Perkins, Parent PLUS loans are made to a student’s parents and repayment is the parents’ obligation, not the student’s. A Parent PLUS loan typically has higher interest rates, although still very reasonable, than other student education loans.

The most prominent difference involves the potential size of Parent PLUS loans. While Federal loans made to students have relatively low limits, Parent PLUS loans may be made for the entire cost of an education less other student loans, grants, and scholarships.

These loans often play a critical role in meeting post-secondary education expenses.