What Is the Maximum Parent PLUS Loan Amount?

Parent PLUS loans are federal education loans for parents of dependent undergraduate students. They help cover educational costs not met by other financial aid. The U.S. Department of Education is the lender for these loans, available through schools participating in the Direct Loan Program.

Determining the Maximum Parent PLUS Loan Amount

The maximum Parent PLUS Loan amount is not a fixed dollar figure. It is determined by the student’s Cost of Attendance (COA) at their specific school, minus any other financial assistance the student receives. This means the amount can vary significantly by institution and the student’s financial aid package.

The COA is a comprehensive estimate provided by the school, including direct and indirect educational expenses for an academic year. Direct costs typically include tuition, fees, and on-campus room and board. Indirect costs cover items such as books, supplies, transportation, and personal expenses. The school determines this total COA, which serves as a cap for the total financial aid a student can receive.

To calculate the maximum Parent PLUS Loan, subtract all other financial aid from the COA. This financial aid includes scholarships, grants, and other federal student loans. For example, if a school’s COA is $50,000 and the student receives $15,000 in scholarships and $5,000 in federal student loans, the maximum Parent PLUS Loan would be $30,000. Borrowers are not required to take the full eligible amount.

Parent Eligibility Requirements

To qualify for a Parent PLUS Loan, the borrower must be the biological or adoptive parent of a dependent undergraduate student. Stepparents may qualify if their income and assets are on the student’s Free Application for Federal Student Aid (FAFSA). Both the parent and the student must meet general federal student aid eligibility requirements, including being a U.S. citizen or eligible non-citizen and having a valid Social Security Number. The parent must not be in default on any federal student loan or owe a refund on a federal student grant.

A credit check is performed, and the parent must not have an adverse credit history. This is defined by specific financial events, not a minimum credit score. Examples include debts with a combined outstanding balance greater than $2,085 that are 90 or more days delinquent, or debts placed in collection or charged off within the past two years. Other adverse events within the last five years include bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a federal student aid debt. If an adverse credit history is found, the parent may still obtain the loan by securing an endorser or documenting extenuating circumstances.

Student Eligibility Requirements

For a parent to receive a Parent PLUS Loan, the student must meet specific eligibility requirements. The student must be a dependent undergraduate student enrolled at least half-time at an eligible educational institution.

The student must pursue a degree or an eligible certificate program and maintain satisfactory academic progress (SAP) as defined by their school. Additionally, the student must meet general federal student aid eligibility requirements, including being a U.S. citizen or eligible non-citizen and having a valid Social Security Number. They must not be in default on any federal student loans or owe a refund on a federal student grant.

The Application Process

Applying for a Parent PLUS Loan involves several steps, typically completed online. The process begins with the student completing the Free Application for Federal Student Aid (FAFSA). This provides the school with information to determine the student’s Cost of Attendance and other financial aid.

After FAFSA submission, the parent completes the Parent PLUS Loan Application, usually on StudentAid.gov. A credit check is conducted to assess for adverse credit history.

If approved, the parent must complete a Master Promissory Note (MPN), a legal document promising repayment. If an adverse credit history was overcome, or if required, the parent may need to complete entrance counseling.

Loan Disbursement and Post-Approval Steps

Once approved, Parent PLUS Loan funds are disbursed directly to the student’s school. The loan funds are typically sent in at least two installments, often once per semester or academic term. The school first applies the funds to cover direct educational charges like tuition, fees, and room and board.

Any remaining funds are issued as a refund. This refund can be sent to the parent or, if authorized, directly to the student for other educational expenses. A new Parent PLUS Loan application is required for each academic year. After disbursement, a loan servicer is assigned to manage the account.

Repayment of Parent PLUS Loans

Repayment of Parent PLUS Loans generally begins within 60 days after the final disbursement for the academic year. The standard repayment plan involves fixed monthly payments over 10 years.

Parents may defer payments while the student is enrolled at least half-time. An additional six-month deferment may be available after the student graduates, leaves school, or drops below half-time enrollment. Interest accrues during deferment, and if not paid, it will be added to the principal balance.

Parent PLUS Loans are not directly eligible for all income-driven repayment (IDR) plans. To access an IDR plan, such as the Income-Contingent Repayment (ICR) plan, Parent PLUS Loans must first be consolidated into a Direct Consolidation Loan. Under the ICR plan, payments are based on a percentage of the borrower’s discretionary income. Any remaining balance may be forgiven after 25 years of qualifying payments. Parent PLUS loans have a fixed interest rate and typically include an origination fee. Failure to make payments can lead to serious consequences, including damage to credit, wage garnishment, or offset of tax refunds.