Students Without Credit Can Use Their Parents

About the Loan:

A Parent PLUS Loan is a Federally funded student loan. Parent PLUS loans were created to allow parents to borrow money to fund their child’s higher education. It is primarily for the parents of undergraduates who are their dependents.

These loans are given out based on the parent’s credit. The interest rates are fixed and you don’t have to repay it until after the 2nd disbursement.

Eligibility and Requirements:

-Good Credit: Parents taking out this loan must have good credit.

-Enrolled at Least Half Time: You are required to be attending an approved college or university no less than half time. This generally means you’re taking six or more credit hours each semester.

-Submit a FAFSA: Typically, you are required to submit a Free Application for Federal Student Aid. Most schools will require this but some will not. You can ask your school’s financial aid office if they require a FAFSA for Parent PLUS loans. If they do, you can fill one out online at

-US citizen: You must either be a US citizen or permanent resident. You can also be from American Samoa or Swain’s Island.


-The greatest benefit is that parents are able to get a loan to assist their child in financing their higher education.

-These loans have federally guaranteed low interest. The current interest rate (as of July 1, 2006) is 8.5%.

-Private Lenders offer incentives such as interest reduction and cash rebates.

-It’s not based on income but on credit history. This means you won’t be turned down because your income is too high.

-You can borrow funds to cover such things as tuition, housing, meals, books and supplies.

-Interest could be tax deductible.

How Much Can I Borrow?:

The amount of money you can borrow depends on what it costs you to go to school and how much other financial aid you are receiving. For instance, if you will be paying $8,000 per year to attend school and you have been given $2,000 in financial aid, your parents can borrow up to $6,000.

Once you have been approved the money is sent to your school. It is then disbursed in no less than two installments and used for tuition, fees, and room and board. If there is any money left over sent to your parents and it must be used for your education.


These loans must be repaid in less than ten years. If you must extend your repayment terms, consolidation is your only option.

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