Essential Facts About Parent PLUS Loans: What Families Need to Know

Paying for college is expensive, and for many families, financial aid packages don’t cover the full cost. One commonly offered option to bridge this gap is the Parent PLUS Loan—a federal loan available to parents of dependent undergraduate students.

While Parent PLUS Loans can help finance a college education, they come with serious financial considerations. Before making a decision, parents should fully understand the risks, repayment terms, and long-term impact.

What Is a Parent PLUS Loan?

A Parent PLUS Loan allows parents to borrow money to cover the difference between a school's total cost and the financial aid received (scholarships, grants, federal student loans, and work-study). Unless a college meets 100% of demonstrated financial need, families may be offered a Parent PLUS Loan as an option.

However, this is not a decision to take lightly. As USA Today explains in this article, there are key financial risks associated with these loans.

5 Crucial Facts About Parent PLUS Loans

🔹 Repayment Is the Parent’s Responsibility – The loan cannot be transferred to the student. The parent is the sole borrower and must repay the debt.

🔹 No Borrowing Limit – Unlike federal student loans, Parent PLUS Loans have no cap, meaning parents could take on more debt than they can realistically repay.

🔹 Minimal Credit Requirements – While a credit check is required, proof of income is not. This means parents can borrow large sums without demonstrating the ability to repay.

🔹 Repayment Starts Immediately – Unlike federal student loans that offer a grace period, Parent PLUS Loan repayment begins shortly after disbursement, unless a deferment is requested.

🔹 Higher Interest Rates – Parent PLUS Loans have higher interest rates than other federal student loans, increasing the long-term cost of borrowing.

Is a Parent PLUS Loan the Right Choice?

While loans can be an important part of college financing, not all loans are created equal. Parent PLUS Loans come with significant risks, including potential long-term debt for parents—sometimes lasting into retirement.

Families should carefully compare college financing options, explore scholarships, grants, and lower-interest loans, and consider the long-term financial impact before borrowing.

Final Tip: Informed families make better financial decisions. Before accepting a Parent PLUS Loan, carefully review all options to ensure the best financial future for both the student and the parents.