Did You Know?
♦ The government evaluates the credit history of prospective PLUS loan borrowers.
♦ The yearly limit on PLUS loans is equal to the student’s cost of attendance minus any other financial aid received.
PLUS loans come in two varieties: 1) Parent PLUS loans are for parents borrowing for the education of dependent undergraduate children enrolled in school at least half time and 2) “Grad PLUS” loans are available for graduate and professional students.
In some cases, parents are divorced or separated and more than one parent wants to borrow a PLUS loan. In this situation, each parent should complete a separate application form. The total amount borrowed by both parents cannot exceed the PLUS loan limit, which is the cost of attendance minus any other aid received by the student.
Unlike Stafford loans, PLUS borrowers are generally required to pass a credit check. Unless the lender determines that extenuating circumstances exist, you will not pass the credit check if you:
- Have one or more debts that are 90 or more days delinquent as of the date of the credit report, or that have been placed in collection or charged off (written off) during the two years preceding the date of the credit report, and the total combined outstanding balance of those debts is greater than $2,085; or
- You have been subject to any of the following conditions during the five years preceding the date of the credit report: Repossession; Default Determination; Bankruptcy Discharge; Tax Lien; Wage Garnishment; or Write off of a federal student loan debt. (The Department has on-line FAQs about the PLUS loan credit check).
- PLUS borrowers with poor credit may still get loans if they can find someone with a better credit history to co-sign. Lenders may have additional discretion to find “extenuating circumstances.” You will get a letter if your initial credit check is approved or denied. The Department also sends letters to PLUS loan applicants who are likely to be approved if they request reconsideration of a denial.
Loan Terms, Fees, and Limits
For PLUS loans first disbursed on July 1, 2017 and before July 1, 2018, the rate is 7%. For PLUS loans first disbursed on July 1, 2018 and before July 1, 2019, the rate is 7.60%.
The fixed rate for older Direct PLUS is 7.9%. Interest rates for PLUS Loans taken out prior to July 1, 2006 are variable and capped at 9%.
There are also origination fees for PLUS loans, currently 4.264% if first disbursed on or after October 1, 2017 and before October 1, 2018 and 4.248% if first disbursed on or after October 1, 2018 and before October 1, 2019.
There is no specific limit on the amount of PLUS loans a student or parent can borrow. The maximum amount is the cost of attendance minus any other financial aid received.
Parent PLUS loans are not eligible to be repaid under the income-driven repayment plans. However, parent PLUS borrowers can consolidate the PLUS loans and then choose income contingent repayment (ICR) for the new Direct Consolidation loan.