What Is a Parent PLUS Loan? 2025 Guide

Federal parent PLUS loans are a financial aid option for parents who want to help their dependent undergraduate student pay for college. This type of loan has grown in popularity over the past decade.

According to the Institute of Education Sciences, outstanding debt from parent PLUS loans surged to nearly $110 billion in 2024, compared with $62 billion in 2014.  

Here’s what to know about parent PLUS loan eligibility, how to apply, and how these loans compare to private student loans. 

Current private student loan rates

What is a parent PLUS loan?

A Direct PLUS Loan is a type of federal student loan under the William D. Ford Federal Direct Loan Program. There are two types of Direct PLUS Loans: grad PLUS loans and parent PLUS loans. 

Parent PLUS loans are specifically for parents who are borrowing to support the higher education costs of their dependent undergraduate student. This type of federal student loan can be useful for students who have a financial aid gap.

Who is eligible for a parent PLUS loan?

To take out a parent PLUS loan, the borrower must be the biological or adoptive parent of the dependent undergraduate student whom the loan supports. In some situations, a stepparent might be eligible, but grandparents and legal guardians are ineligible for this loan option.

There is also a credit check to screen for adverse credit. You have adverse credit if:

• You have one or more debts with a total combined outstanding balance greater than $2,085 that are 90 or more days delinquent as of the date of the credit report. This also applies if the debts have been placed in collections or charged off within the past 2 years.
• You’ve been subject to a bankruptcy discharge, repossession or foreclosure, default determination, wage garnishment, tax lien, or write-off of federal student aid debt in the past 5 years. 

Parents with adverse credit histories can still be eligible for a parent PLUS loan after completing additional steps, which include securing an endorser (similar to a cosigner) or documenting extenuating circumstances and undergoing credit counseling.

Additionally, the student must be enrolled at least half-time in an undergraduate program at a participating Title IV school. Both the parent and the student must meet general federal student aid eligibility requirements, like being a U.S. citizen or eligible noncitizen.

How do you apply for a parent PLUS loan?

Generally, you can fill out and submit a parent PLUS loan application online within approximately 20 minutes. Some schools have a different application process, so reach out to the institution’s financial aid office to learn about its requirements. 

Be prepared with your parent FSA ID, personal and employer information, the student’s information, school name, and desired loan amount. Here are the steps to follow:

1. Submit the student’s FAFSA: The first step is ensuring your child completes a Free Application for Federal Student Aid (FAFSA). This can be done online or via a paper application.
2. Lift any existing credit freezes: If your credit is frozen from any new inquiries, you must remove the freeze through the credit bureaus before your PLUS loan application can be processed. 
3. Fill out a Direct PLUS Loan application: Select the award year the loan is for, and enter the student’s and school’s information. You’ll then select your desired loan details and provide your personal and employment information. 
4. Consent to a credit check: This is the final step of the process before reviewing your entries and submitting the application.
5. Wait for school certification: If your credit is approved, your application is sent to the school for review within 24 hours. It will determine your eligibility for a parent PLUS loan and your award amount.
6. Sign the Master Promissory Note: You must review and sign the Master Promissory Note, which is a legal document in which you promise to repay the loan, before the parent PLUS loan can be disbursed to the school. This must be done in one sitting and takes up to 30 minutes.

What are the interest rates and repayment terms?

The current parent PLUS loan interest rate and fees are the highest among all federal student loans. PLUS loans that are first disbursed between July 1, 2025, and June 30, 2026, have a fixed rate of 8.94%. An origination fee of 4.228% also applies. The fee is automatically deducted from the loan amount that’s paid out.

Parent PLUS loan repayment plans include the 10-year Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan, and the Income-Contingent Repayment (ICR) Plan. The ICR Plan adjusts payments on your income and family size, but it’s only available if you consolidate your PLUS loans via a Direct Consolidation Loan.

Pros and cons of parent PLUS loans

Parent PLUS loans offer a handful of advantages and drawbacks that all families should consider before applying. It can be a convenient option with access to valuable federal programs and protections, but it can also be costly and restrictive.

Changes coming to parent PLUS loans

A law enacted in July 2025 includes significant changes to student loans, including parent PLUS loans, starting in July 2026. Major changes include:

• Eligibility requirements: Parents can only take out a parent PLUS loan after their child has already hit the annual Direct Unsubsidized Loan limit. 
• Borrowing limits: The new borrowing limits for parent PLUS loans are significantly lower. The annual limit is $20,000, and the aggregate borrowing limit is $65,000 per student.
• Repayment options: The existing student loan repayment plans, including the Income Contingent Repayment Plan, will be eliminated and replaced with a new Standard Repayment Plan and a Repayment Assistance Plan. 

“As an overall message, the new law has significantly changed how families save and pay for college,” says Jack Wang, a wealth adviser at Innovative Advisory Group and host of the Smart College Buyer podcast. “And if a family has a current high school student, or a college student needing to head to grad school — and the family needs to borrow to pay for those programs — that family is in real trouble!”

How do parent PLUS loans compare to private parent loans?

Private parent loans are an alternative to parent PLUS loans. However, they work quite differently. Here’s how parent PLUS loans vs. private loans generally compare.

Mark Kantrowitz, author of “How To Appeal for More College Financial Aid,” explains that the origination fee on parent PLUS loans significantly adds to the cost of borrowing compared with private loans.

“Note that the parent PLUS loan has a 4.288% fee, which is the equivalent of an interest rate that is a full percentage point higher on a 10-year repayment term,” he says. “So, add 1% to the interest rate on the parent PLUS loan when comparing it with the interest rate on the private student loan, which usually has no fees.”