Federal Direct PLUS Loans: What You Should Know

Federal Direct PLUS Loans have long helped students bridge the gap between their awarded federal financial aid and their school's cost of attendance. That role has narrowed sharply under new rules that took effect in July 2026.

Grad PLUS loans are no longer available for new borrowers, and parent PLUS loans now have borrowing limits. Here's what you need to know about these changes.

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How did Direct PLUS Loans change in 2026?

Grad PLUS is gone for new borrowers 

Graduate and professional students who haven't already taken out federal student loans for their current program are now limited to Direct Unsubsidized Loans, which carry their own caps:

• Graduate students: $20,500 per year, $100,000 lifetime cap
• Professional students (medicine, law, dentistry, veterinary medicine, pharmacy, and a few similar fields): $50,000 per year, $200,000 lifetime cap

Parent PLUS loans still exist, with new caps 

Parents borrowing for the first time on or after July 1, 2026 are limited to $20,000 per year and $65,000 total per student, regardless of the school's actual cost.

A legacy provision for PLUS loans applies to qualifying current borrowers. Those with Direct Loans (Subsidized, Unsubsidized, or PLUS) disbursed for their current program before July 1, 2026, may be able to keep borrowing under the old, uncapped rules for up to three more years or until the program ends, whichever is sooner.

What is the current interest rate for a PLUS loan?

For Direct PLUS Loans disbursed between July 1, 2026, and June 30, 2027, the interest rate is 9.07%, up from 8.94% in the prior school year. Additionally, all PLUS loans have an origination fee of 4.228%, which is deducted from the amount disbursed.

PLUS loans have fixed interest rates, meaning the rate locked in for your specific disbursement remains the same for the life of the loan.

Who qualifies for PLUS loans?

Since grad PLUS loans are no longer available to new borrowers, parent PLUS is now the primary Direct PLUS Loan option. To qualify, you must:

• Not have adverse credit: A required credit check must come back clean, or you must meet certain additional requirements to qualify despite adverse history.
• Borrow within the allowable limit: New parent PLUS borrowers can borrow up to $20,000 per year and $65,000 total per student, regardless of cost of attendance.
• Be an eligible parent: You must be the biological or legal adoptive parent of a dependent undergraduate.
• Meet enrollment requirements: The student must be enrolled at least half-time in a degree- or certificate-granting program at an eligible school.

All PLUS loan borrowers must also meet basic federal student aid qualifications:

• Eligibility for enrollment: Qualified to pursue a college or career school education (e.g., high school diploma or GED).
• Citizenship: U.S. citizen or eligible noncitizen.
• Academic performance: Satisfactory academic progress, including staying on track to graduate and meeting GPA requirements.
• Good standing: No federal loans in default and no outstanding obligation to repay a federal grant.

Graduate and professional students who qualify for the legacy exemption and can still borrow under the old rules must also meet the credit, enrollment, and citizenship requirements.

How to apply for a Direct PLUS Loan

Submitting an application for a federal Direct PLUS Loan is relatively straightforward and takes approximately 20 minutes. Here are the general steps you’ll need to take:

1. File the FAFSA: Before submitting a formal application for a PLUS loan, graduate students and dependent undergraduate students should first fill out and submit a Free Application for Federal Student Aid (FAFSA).
2. Lift any existing credit freezes: A credit check is required to determine whether you have adverse credit. If you have an active credit freeze in place, remove the freeze by contacting the credit bureaus to avoid application processing issues.
3. Log in to your StudentAid.gov account: Graduate students and parent borrowers must log in to StudentAid.gov using their own FSA ID credentials.
4. Fill out the Direct PLUS Loan application online: You’ll need to provide information about the student and school, as well as details about the desired loan (such as loan amount and loan period). You must certify that the information you provided is accurate and consent to a credit check. Parents will also need to provide their personal and employer information. Finally, review your responses and submit the application digitally.
5. Sign the Master Promissory Note (MPN): If you’re eligible for a Direct PLUS Loan, you must sign the MPN, which outlines the terms of the repayment agreement for the loan. You’ll also need to complete entrance counseling if this is your first PLUS loan.

It’s important to note that some schools have a different application process. Consider speaking to your school’s financial aid administrator to confirm how to apply for student loans.

If you’re deciding between a PLUS loan or another aid option, like a private student loan, there are a few considerations to weigh, according to Brian Safdari, CEO and founder of College Planning Experts, a Los Angeles-based college admissions resource.

Ultimately, it comes down to whether you value a federally backed fixed-rate loan, having flexible repayment options, and access to loan forgiveness, advises Safdari. 

“Last year, I had a client of mine that passed away from a car accident and he borrowed $150K in federal loans. All the loans were forgiven due to his death and his widow[ed] wife and kids did not have to pay back the loans,” says Safdari, who points out that death discharge isn’t guaranteed for all private loans.

Parent PLUS vs. grad PLUS loans

Below is an overview of the similarities and differences between the two Direct PLUS Loan types.

Tom O’Hare, holistic college adviser at Get College Going, highlights parent borrowers’ biggest misconception about parent PLUS loans. 

“Parent borrowers think that the Direct PLUS Loan carries the same benefits that a Direct student loan does,” says O’Hare. “A Direct PLUS Loan carries no in-school postponement of payment, waiver of interest accrual, and [has] limited repayment options.” 

Repayment options for PLUS loans

Repayment options for PLUS loans depend on when your federal loans were disbursed.:

If all your federal loans were disbursed before July 1, 2026:

These loans keep access to the legacy selection of repayment plans:

• Standard Repayment Plan: A fixed plan with equal monthly installment payments over a 10-year period.
• Graduated Repayment Plan: A fixed plan that starts with lower payments that gradually increase over a 10-year term.
• Extended Repayment Plan: A fixed or graduated monthly payment over a longer 25-year term. Requires more than $30,000 in outstanding Direct Loans to qualify.
• Income-Based Repayment (IBR): Payments set at 10% or 15% of discretionary income over 20 or 25 years, depending on when you borrowed. IBR is the one income-driven plan that isn't being phased out — it remains available going forward.
• Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR): Still usable for now, but all are being retired. Borrowers on these plans must switch to an eligible plan (IBR, the new Repayment Assistance Plan, or the Standard Repayment Plan) by July 1, 2028.

Grad PLUS borrowers with loans in this window can use any of the above IDR options. Parent PLUS borrowers are limited to ICR, and only after consolidating their loans — though ICR's phase-out means that path is temporary too.

If you have loans disbursed on or after July 1, 2026

Only two repayment options exist for new loans:

• Repayment Assistance Plan (RAP): The new income-driven plan, replacing SAVE, PAYE, and ICR.
• Tiered Standard Repayment Plan: Fixed payments over a term of 10–25 years, based on loan balance.