Understand Parent PLUS Loans for College
If your student's financial aid package leaves a gap, you'll likely need a Parent PLUS loan. Here's what every parent should understand before taking on college debt.
The New Reality
$200,000 lifetime cap on PLUS loans is now in effect. Most parents will need some form of loan—an estimated 80-90% of families use PLUS loans to bridge the financial aid gap.
Alternatives to Consider First
Before taking a PLUS loan, explore these options:
401(k)/403(b)/457 loans - Often lower rates, paid back through payroll deductions
Budget reductions - Technology, car payments, sibling private school costs
Payroll withholding changes - Adjust for education tax deductions
Home equity - If refinancing anyway, include college costs
Increased household income - Can you take on additional work?
Warning: Be cautious with loans from relatives—they often come with strings attached.
Student Actions That Reduce PLUS Loans
Your student's behavior directly impacts how much you'll borrow:
Get active on campus - Building friendships leads to off-campus housing (saves 30-40%)
Choose career-focused majors - Avoid majors with no direct job path
Take community college summer classes - Saves thousands
Prevent D's and F's - Use tutoring centers proactively
Academically prepare - Summer enrichment in writing, math, or biology prevents freshman struggles
Credit Check Requirements
You'll be automatically rejected for any ONE of these:
Federal tax lien or levy
Default on payment agreements
Mortgage foreclosure (last 5 years)
Chapter 7 or 11 bankruptcy (last 5 years)
90+ day delinquency over $2,085
Appealable situations: Payment defaults, delinquencies, and repossessions—if you set up payment arrangements.
Estimate: About 1/3 of families won't qualify for PLUS loans. Know this NOW when choosing schools.
How PLUS Loans Work
Apply at studentloans.gov with YOUR FSA ID (not your student's)
Let the school calculate the loan amount—covers direct costs and one-time fees
Approval takes 20-30 seconds
Payments start 30-60 days after disbursement (or defer until graduation, with interest)
Disbursement: Half in fall, half in spring, 10 days before classes start
What Will You Pay Monthly?
Current rate: 8.63% (expected to decrease)
$30,000 total debt = $374/month for 10 years
$50,000 total debt = $600/month for 10 years
$100,000 total debt = $1,246/month for 10 years
$190,000 total debt = $2,369/month for 10 years
If these payments feel unaffordable, the school costs too much.
Choose an affordable college from the start. PLUS loans should bridge a reasonable gap—not finance an entire education. Look at your potential monthly payment before committing to any school.