Are you a parent or guardian looking to help your child pursue higher education? If so, you may be wondering if you qualify for a Parent PLUS loan. This federal loan program is designed to help parents and guardians cover the cost of their child's education. In this article, we will discuss the eligibility requirements for Parent PLUS loans, as well as the application process and repayment options.
The Parent PLUS loan program is a great option for parents who want to help their children pay for college. The loans are available to parents of dependent undergraduate students who are enrolled at least half-time at an eligible college or university. The loans can be used to cover the cost of tuition, fees, room and board, and other education expenses.
To be eligible for a Parent PLUS loan, you must meet certain criteria. These criteria include:
Parent PLUS Loan Eligibility
To be eligible for a Parent PLUS loan, you must meet certain criteria. These criteria include:
- Be a U.S. citizen or eligible noncitizen
- Have good credit history
- Not have an adverse credit history
- Be the parent of a dependent undergraduate student
- Student must be enrolled at least half-time
- Student must be making satisfactory academic progress
- Student must not have defaulted on any federal student loans
- Student must not owe a refund on any federal student grants
- Parent cannot have defaulted on any federal student loans
If you meet all of these criteria, you may be eligible for a Parent PLUS loan. You can apply for a Parent PLUS loan online or through your child's school. The application process is relatively simple and straightforward.
Be a U.S. citizen or eligible noncitizen
To be eligible for a Parent PLUS loan, you must be a U.S. citizen or an eligible noncitizen. Eligible noncitizens include:
- Permanent residents
You must have a valid Permanent Resident Card (Green Card).
- Conditional residents
You must have a valid Conditional Resident Card (Form I-551).
- Asylees and refugees
You must have a valid Employment Authorization Document (EAD) with a Category Code of A5, A8, C8, or C9.
- Cuban-Haitian entrants
You must have a valid Employment Authorization Document (EAD) with a Category Code of S5 or S9.
If you are not a U.S. citizen or an eligible noncitizen, you will not be able to obtain a Parent PLUS loan. However, you may be able to obtain a private student loan from a bank or credit union.
Have good credit history
To be eligible for a Parent PLUS loan, you must have a good credit history. This means that you have a history of paying your bills on time and have not defaulted on any loans. Lenders will typically look at your credit score to determine your creditworthiness. A credit score is a number that ranges from 300 to 850. A higher credit score indicates a lower risk of default, which makes you more likely to be approved for a loan and get a lower interest rate.
If you have a good credit history, you are more likely to be approved for a Parent PLUS loan and get a lower interest rate. However, if you have a poor credit history, you may be denied a loan or you may be offered a higher interest rate.
Here are some tips for building a good credit history:
- Pay your bills on time, every time.
- Keep your credit utilization low.
- Don't open too many new credit accounts in a short period of time.
- Monitor your credit reports regularly for errors.
If you have a poor credit history, there are steps you can take to improve it. Start by paying down your debts and making all of your payments on time. You can also get a credit builder loan or a secured credit card to help you rebuild your credit.
Once you have improved your credit history, you may be able to qualify for a Parent PLUS loan with a lower interest rate.
Not have an adverse credit history
In addition to having a good credit history, you also cannot have an adverse credit history in order to be eligible for a Parent PLUS loan. An adverse credit history includes:
- A bankruptcy discharge within the past five years
- A foreclosure on a home loan within the past five years
- A tax lien within the past five years
- A default on a federal student loan
- A default on a private student loan
- A judgment against you for unpaid child support
- A conviction for a drug offense
If you have any of these items on your credit history, you may be denied a Parent PLUS loan. However, you may still be able to obtain a loan if you can provide extenuating circumstances that explain the adverse credit history.
For example, if you filed for bankruptcy due to medical expenses, you may still be able to get a Parent PLUS loan if you can show that you have been making regular payments on your other debts and that you have a stable income.
If you have an adverse credit history, you should contact the lender to discuss your options. The lender may be able to work with you to find a solution that allows you to obtain a Parent PLUS loan.
It is important to note that the adverse credit history criteria for Parent PLUS loans is different from the criteria for other federal student loans. For example, you can still get a Direct Subsidized Loan or Direct Unsubsidized Loan even if you have an adverse credit history.
Be the parent of a dependent undergraduate student
To be eligible for a Parent PLUS loan, you must be the parent of a dependent undergraduate student. This means that the student must be:
- Enrolled at least half-time at an eligible college or university
- Making satisfactory academic progress
- Not in default on any federal student loans
- Not owe a refund on any federal student grants
- Claimed as a dependent on your most recent federal income tax return
If your child is not your dependent, you will not be able to obtain a Parent PLUS loan. However, you may be able to obtain a private student loan to help pay for your child's education.
To determine if your child is your dependent, you can use the IRS's Dependency Test. The Dependency Test has five factors:
- Support: You must provide more than half of your child's support during the calendar year.
- Gross income: Your child's gross income must be less than $4,400 in 2023.
- Age: Your child must be under the age of 24 at the end of the calendar year.
- Marital status: Your child cannot be married at the end of the calendar year.
- Residence: Your child must live with you for more than half of the calendar year.
If your child meets all of these factors, then they are your dependent and you may be eligible for a Parent PLUS loan.
It is important to note that the definition of a dependent for Parent PLUS loans is different from the definition of a dependent for other purposes, such as claiming a dependent on your tax return. For example, a student who is over the age of 24 may still be your dependent for Parent PLUS loan purposes if they meet the other requirements.
Student must be enrolled at least half-time
To be eligible for a Parent PLUS loan, your child must be enrolled at least half-time at an eligible college or university. Half-time enrollment is typically defined as taking at least six credit hours per semester or quarter.
- Full-time enrollment
If your child is enrolled full-time, they are taking at least 12 credit hours per semester or quarter.
- Three-quarter-time enrollment
If your child is enrolled three-quarter-time, they are taking at least 9 credit hours per semester or quarter.
- Half-time enrollment
If your child is enrolled half-time, they are taking at least 6 credit hours per semester or quarter.
- Less than half-time enrollment
If your child is enrolled less than half-time, they are taking less than 6 credit hours per semester or quarter. Parent PLUS loans are not available for students who are enrolled less than half-time.
The number of credit hours that your child needs to take to be considered enrolled at least half-time may vary depending on the school and the program of study. You can contact the school's financial aid office to find out how many credit hours your child needs to take to be considered enrolled at least half-time.
Student must be making satisfactory academic progress
To be eligible for a Parent PLUS loan, your child must be making satisfactory academic progress (SAP) towards a degree or certificate. SAP is defined by the school and may vary from school to school. However, there are some general standards that most schools use to determine SAP.
- Grade point average (GPA)
Most schools require students to maintain a minimum GPA in order to be making SAP. The minimum GPA may vary depending on the school and the program of study.
- Pace of completion
Schools also look at the pace at which students are completing their coursework. Students who are taking too long to complete their degree or certificate may not be making SAP.
- Maximum time frame
Most schools have a maximum time frame for students to complete their degree or certificate. Students who exceed the maximum time frame may not be making SAP.
- Other factors
Schools may also consider other factors when determining SAP, such as the student's attendance, participation, and academic standing.
If your child is not making SAP, they may be placed on academic probation or suspension. They may also lose their eligibility for federal student loans, including Parent PLUS loans. You can contact the school's financial aid office to find out what the SAP requirements are and to see if your child is making SAP.
Student must not have defaulted on any federal student loans
To be eligible for a Parent PLUS loan, your child cannot have defaulted on any federal student loans. Defaulting on a loan means that you have failed to make your loan payments for a certain period of time, typically 270 days or more.
- Consequences of defaulting on a federal student loan
Defaulting on a federal student loan can have serious consequences, including:
- Wage garnishment
- Tax refund offset
- Loss of eligibility for federal student aid
- Difficulty obtaining a credit card or other loan
- Rehabilitation
If your child has defaulted on a federal student loan, they may be able to rehabilitate the loan. Rehabilitation involves making a series of on-time payments over a period of time, typically nine to ten months. Once the loan is rehabilitated, your child will regain eligibility for federal student aid, including Parent PLUS loans.
- Consolidation
Your child may also be able to consolidate their federal student loans into a single loan. Consolidation can make it easier to repay the loans and may also lower the interest rate. However, consolidation does not eliminate the default status of the loans.
- Parent PLUS loans and defaulted federal student loans
If your child has defaulted on a federal student loan, you may still be able to obtain a Parent PLUS loan. However, the lender may require you to provide additional documentation, such as a credit history report or a co-signer.
If your child has defaulted on a federal student loan, you should contact the loan servicer immediately to discuss your options. The loan servicer may be able to help you rehabilitate the loan or consolidate the loans.
Student must not owe a refund on any federal student grants
To be eligible for a Parent PLUS loan, your child cannot owe a refund on any federal student grants. Federal student grants are gift aid that does not have to be repaid. However, if your child receives a federal student grant and then withdraws from school or reduces their course load below half-time, they may be required to repay some or all of the grant money.
The amount of the refund is calculated based on the percentage of the semester or quarter that your child attended. For example, if your child withdraws from school after completing 30% of the semester, they would be required to repay 70% of the grant money.
If your child owes a refund on a federal student grant, they will not be eligible for a Parent PLUS loan until the refund is paid in full. They may also be required to sign a repayment agreement with the Department of Education.
There are a few exceptions to the rule that students cannot owe a refund on any federal student grants in order to be eligible for a Parent PLUS loan. For example, students who withdraw from school due to military service or a medical emergency may not be required to repay the grant money.
If your child owes a refund on a federal student grant, you should contact the school's financial aid office to discuss your options. The financial aid office may be able to help you determine if your child is eligible for an exception to the rule.
Parent cannot have defaulted on any federal student loans
To be eligible for a Parent PLUS loan, you cannot have defaulted on any federal student loans. Defaulting on a loan means that you have failed to make your loan payments for a certain period of time, typically 270 days or more.
- Consequences of defaulting on a federal student loan
Defaulting on a federal student loan can have serious consequences, including:
- Wage garnishment
- Tax refund offset
- Loss of eligibility for federal student aid
- Difficulty obtaining a credit card or other loan
- Rehabilitation
If you have defaulted on a federal student loan, you may be able to rehabilitate the loan. Rehabilitation involves making a series of on-time payments over a period of time, typically nine to ten months. Once the loan is rehabilitated, you will regain eligibility for federal student aid, including Parent PLUS loans.
- Consolidation
You may also be able to consolidate your federal student loans into a single loan. Consolidation can make it easier to repay the loans and may also lower the interest rate. However, consolidation does not eliminate the default status of the loans.
- Parent PLUS loans and defaulted federal student loans
If you have defaulted on a federal student loan, you may still be able to obtain a Parent PLUS loan. However, the lender may require you to provide additional documentation, such as a credit history report or a co-signer.
If you have defaulted on a federal student loan, you should contact the loan servicer immediately to discuss your options. The loan servicer may be able to help you rehabilitate the loan or consolidate the loans.
FAQ
Here are some frequently asked questions about Parent PLUS loans:
Question 1: What is a Parent PLUS loan?
Answer 1: A Parent PLUS loan is a federal student loan that allows parents of dependent undergraduate students to borrow money to help pay for their child's education.
Question 2: Who is eligible for a Parent PLUS loan?
Answer 2: To be eligible for a Parent PLUS loan, you must be the parent of a dependent undergraduate student who is enrolled at least half-time at an eligible college or university. You must also have good credit and not have defaulted on any federal student loans.
Question 3: How much can I borrow with a Parent PLUS loan?
Answer 3: The maximum amount you can borrow with a Parent PLUS loan is the cost of attendance at your child's school, minus any other financial aid that your child receives.
Question 4: What is the interest rate on a Parent PLUS loan?
Answer 4: The interest rate on a Parent PLUS loan is fixed at 7.54% for loans first disbursed on or after July 1, 2023.
Question 5: How do I repay a Parent PLUS loan?
Answer 5: You will begin repaying your Parent PLUS loan six months after your child graduates, leaves school, or drops below half-time enrollment. You can choose to repay your loan over a period of 10 to 25 years.
Question 6: Can I get a Parent PLUS loan if I have bad credit?
Answer 6: You may still be able to get a Parent PLUS loan if you have bad credit, but you may be required to provide a co-signer.
Question 7: What are the benefits of getting a Parent PLUS loan?
Answer 7: Parent PLUS loans have several benefits, including low interest rates, flexible repayment options, and the ability to borrow up to the full cost of attendance.
Closing Paragraph for FAQ: If you have any other questions about Parent PLUS loans, you can contact your lender or the U.S. Department of Education.
Now that you know more about Parent PLUS loans, here are some tips for getting approved for a loan and getting the best possible interest rate:
Tips
Here are some tips for getting approved for a Parent PLUS loan and getting the best possible interest rate:
Tip 1: Apply early.
The earlier you apply for a Parent PLUS loan, the more time the lender will have to process your application and approve your loan. This will also give you more time to shop around for the best interest rate.
Tip 2: Improve your credit score.
If you have bad credit, you may be able to improve your credit score by paying down your debts, disputing any errors on your credit report, and avoiding opening new credit accounts. A higher credit score will give you a better chance of getting approved for a Parent PLUS loan and getting a lower interest rate.
Tip 3: Get a co-signer.
If you have bad credit or no credit history, you may be able to get a Parent PLUS loan if you have a co-signer. A co-signer is someone with good credit who agrees to repay the loan if you default.
Tip 4: Shop around for the best interest rate.
Once you have been approved for a Parent PLUS loan, you should shop around for the best interest rate. You can do this by comparing the interest rates offered by different lenders.
Closing Paragraph for Tips: By following these tips, you can increase your chances of getting approved for a Parent PLUS loan and getting the best possible interest rate.
Now that you know more about Parent PLUS loans and how to get approved for one, you can start the process of applying for a loan. Be sure to apply early, improve your credit score, get a co-signer if necessary, and shop around for the best interest rate.
Conclusion
Parent PLUS loans can be a helpful way to pay for your child's education. However, it is important to understand the eligibility requirements and repayment terms before you apply for a loan. If you qualify for a Parent PLUS loan, there are a few things you can do to get the best possible interest rate, such as applying early, improving your credit score, getting a co-signer, and shopping around for the best interest rate.
If you have any questions about Parent PLUS loans, you can contact your lender or the U.S. Department of Education. You can also find more information about Parent PLUS loans on the Federal Student Aid website.
Closing Message: Remember, you are not alone in this process. Millions of parents have taken out Parent PLUS loans to help their children pay for college. If you plan carefully and make informed decisions, you can get the financing you need to help your child achieve their educational goals.