Can Parent PLUS Loans Be Used for Off Campus Housing?
Understand how Parent PLUS loans can cover student off-campus housing and other college attendance costs.
Parent PLUS loans are federal education loans provided by the U.S. Department of Education to help parents cover the costs of higher education for their dependent undergraduate students. These loans are designed to bridge the gap between a student’s other financial aid and the total cost of attending college.
Understanding Eligible Education Expenses for Parent PLUS Loans
Parent PLUS loans can be used to cover a wide range of educational expenses, including those associated with off-campus housing. The funds from these loans are intended to help pay for a student’s “cost of attendance” (COA) as determined by their specific school. This comprehensive COA includes not only direct charges like tuition and fees but also indirect costs.
Eligible expenses encompass tuition and school fees, as well as room and board, which includes both on-campus and off-campus housing arrangements. For students living off-campus, this can cover rent, utility bills, and even the cost of groceries. Parent PLUS loans can also help pay for books and supplies, transportation costs, and other miscellaneous personal expenses related to the student’s education.
While off-campus housing is an eligible expense, the school determines a standard allowance for housing, whether on or off campus, which then forms part of the maximum loan amount. Borrowers should confirm the school’s specific COA breakdown to understand how off-campus living costs are factored in.
How Parent PLUS Loan Amounts Are Determined
The maximum amount a parent can borrow through a Parent PLUS loan is directly tied to the student’s Cost of Attendance (COA), as calculated by their educational institution. The COA represents the total estimated cost of attending that particular school for an academic year. This figure is a comprehensive estimate that includes all eligible educational expenses, such as housing, books, and personal costs.
The loan amount cannot exceed the school’s determined COA minus any other financial aid the student receives. This other aid can include scholarships, grants, or other federal student loans, which reduce the amount available through the Parent PLUS loan. For instance, if the COA is $30,000 and the student receives $10,000 in scholarships, the Parent PLUS loan maximum would be $20,000.
The school’s financial aid office plays a central role in this process by calculating the student’s specific COA. They certify the loan amount based on their figures for various expense categories, including the allowance for off-campus housing.
Receiving and Managing Parent PLUS Loan Funds
Once a Parent PLUS loan is approved, the funds are typically disbursed directly to the student’s school. The school first applies these funds to cover institutional charges, such as tuition, fees, and any on-campus room and board. This direct application ensures that the primary costs of attendance are addressed.
If any loan funds remain after these direct institutional charges are paid, the school will then issue a refund of the excess amount. This refund is typically sent to the parent borrower, although with the parent’s authorization, it can be disbursed directly to the student. These disbursements often occur per semester or term, with the loan amount usually divided evenly across the academic year.
Parents are then responsible for managing these refunded funds to pay for other eligible educational expenses, including off-campus housing costs like rent and utilities, as well as books, supplies, and personal expenses. Borrowers should budget these funds carefully, as they are intended to cover costs for the entire disbursement period. For example, a single refund might need to cover several months of rent and living expenses.