Are Parent PLUS Loans in the Student’s Name or the Parent’s?
Understand who is legally responsible for Parent PLUS Loans, how repayment works, and what role students may have in the process.
Paying for college can be expensive, and many families turn to federal Parent PLUS Loans to help cover costs. Unlike other types of student aid, these loans place financial responsibility on the parent, not the student. Understanding how they work is essential before borrowing.
Who Legally Owns the Loan
A Parent PLUS Loan is always issued in the parent’s name, making them solely responsible for repayment. While the funds support the student’s education, the student has no legal obligation to repay the debt. This structure differs from federal student loans, which students borrow directly and may have different repayment and forgiveness options.
Credit history plays a role in eligibility. Unlike Direct Subsidized or Unsubsidized Loans, which do not require a credit check, Parent PLUS Loans require borrowers to meet certain credit standards. If a parent has adverse credit—such as recent bankruptcies or accounts in collections—they may need an endorser or provide documentation of extenuating circumstances to qualify.
Only the parent borrower can request deferment, forbearance, or loan forgiveness. If they default, consequences like wage garnishment or tax refund offsets impact them alone. The student’s financial standing remains unaffected, even though the loan was used for their education.
How Repayment Works
Repayment begins once the loan is fully disbursed, meaning the funds have been sent to the school. Unlike federal student loans, which offer a six-month grace period, Parent PLUS Loans require immediate repayment unless the parent requests deferment. Parents can defer payments while their child is enrolled at least half-time and for six months after they leave school, but interest continues to accrue.
Repayment options include standard, graduated, and extended plans. The standard plan features fixed payments over 10 years. The graduated plan starts with lower payments that increase every two years. The extended plan allows repayment over 25 years but results in higher total interest costs. Parent PLUS Loans are not eligible for most income-driven repayment (IDR) plans unless consolidated into a Direct Consolidation Loan, at which point they may qualify for Income-Contingent Repayment (ICR), which bases payments on discretionary income.
Loan forgiveness options are limited. Parents working in qualifying public service jobs may be eligible for Public Service Loan Forgiveness (PSLF) if they consolidate the loan and make 120 qualifying payments. Parent PLUS Loans do not qualify for other forgiveness programs, such as income-driven forgiveness. If repayment becomes difficult, forbearance or deferment can provide temporary relief, but interest will continue to accumulate.
Eligibility Criteria
The borrower must be the biological, adoptive, or, in some cases, stepparent of a dependent undergraduate student enrolled at least half-time at an eligible institution. Legal guardians and other relatives, such as grandparents, are not eligible unless they have formally adopted the student. The student must also meet general federal aid requirements, including U.S. citizenship or eligible noncitizen status, and must not be in default on any existing federal loans.
A credit check determines if the parent has an adverse credit history. While a high credit score is not required, factors such as recent bankruptcies, foreclosures, or accounts in collections may result in denial. If denied, a parent can secure an endorser or provide documentation of extenuating circumstances. If they do not pursue these options, the student may become eligible for additional Direct Unsubsidized Loan funds.
Unlike Direct Subsidized and Unsubsidized Loans, which have borrowing limits, Parent PLUS Loans allow parents to borrow up to the full cost of attendance minus other financial aid received. Schools determine the cost of attendance, including tuition, fees, room and board, books, and other expenses. While this flexibility can be helpful, it also increases the risk of overborrowing.
Student Involvement
Though the Parent PLUS Loan is in the parent’s name, students can help reduce borrowing by securing scholarships, grants, or work-study opportunities. Managing personal expenses wisely—such as choosing cost-effective housing and minimizing discretionary spending—can also lessen the financial burden.
Some families establish informal agreements where students contribute to loan payments after graduation. Though not legally required, these arrangements can help parents manage repayment.
Disbursement Details
Once approved, Parent PLUS Loan funds are sent directly to the student’s school. Schools apply the funds to tuition, fees, room and board, and other institutional charges before issuing any remaining balance to the parent or student, depending on the borrower’s preference.
If there is a surplus after covering school-related expenses, parents can choose whether the excess funds go to them or the student. Some families use this money for textbooks, transportation, or living expenses. If a parent determines they borrowed more than necessary, they can return unused funds within 120 days of disbursement without accruing interest or fees.