Parent Plus Loan Award Amount: Everything You Need to Know

The Parent Plus Loan Award Amount can be a bit confusing, but don't worry, I've got the lowdown.

The maximum Parent Plus Loan Award Amount is $38,500 per year, or a total of $148,500 for a four-year undergraduate degree.

To be eligible for a Parent Plus Loan, you must demonstrate a satisfactory credit history, which is determined by the Department of Education.

You can borrow up to the cost of attendance minus any other financial aid your child receives.

A Parent Plus Loan is issued by the federal government, making it a government-backed loan.

This loan is specifically designed for parents of dependent students who want to borrow funds to help pay for their child's college or career school expenses.

The Parent Plus Loan is also known as a Direct PLUS Loan, which is a straightforward name that tells you exactly what it is.

Intriguing read: Gov Debt Consolidation Loans

The Parent PLUS Loan is a federal loan offered to parents of dependent students to help pay for college or career school.

The borrowing limit for a Parent PLUS Loan is the cost of attendance minus any other financial aid and scholarships received. This means families can borrow up to the full cost of attendance if needed.

The interest rate for a Parent PLUS Loan is fixed at 9.08%, set by the federal government each year. There's also an origination fee of 4.228% that's deducted before the loan is applied to student financial accounts.

You can use the Loan Simulation Tool to estimate your repayment on potential student loans and see what your future monthly payments might look like.

Check this out: Mortgage Loans with No Closing Costs

The interest rate for Parent PLUS Loans first disbursed on or after July 1, 2024, and before July 1, 2025, is 9.08%, fixed for the life of the loan.

This rate is determined by the government, which resets it every year on July 1. The interest rate for the 2023-24 academic year is 8.05%.

A unique perspective: 12 Month Introductory Rate Heloc

Interest rates and origination fees can change on July 1 each year, so the rate may be different each year you borrow.

If you receive the 0.25 percent discount for enrolling in automatic monthly payments, the interest rate will decrease slightly.

Note that private student loans may have a better interest rate than PLUS Loans if parents have excellent credit, so it's worth comparing them.

Here's a summary of the interest rates and fees for Parent PLUS Loans:

Federal Direct Loans are a type of loan that the U.S. Department of Education offers to students and their parents.

You can borrow up to the cost of attendance minus any other financial aid your child receives. The maximum amount you can borrow varies depending on the school's cost of attendance and your child's dependency status.

You'll need to fill out the Free Application for Federal Student Aid (FAFSA) to apply for a Federal Direct Loan. This form will determine your Expected Family Contribution (EFC) and help you understand how much you're eligible to borrow.

Federal Direct Loans have a fixed interest rate, which can range from 4.53% to 7.08% depending on the loan type and the borrower's dependency status.

You can't transfer repayment responsibility of Parent PLUS loans to the student. If you want the student to ultimately be responsible for the debt, consider cosigning a private student loan for them, as most allow students to apply for cosigner release after making on-time payments.

Most private student loans require 12 to 24 on-time payments and meeting all eligibility requirements for the cosigner to be removed.

If the goal is to have the student take over the Parent PLUS loan, it's not possible, but you can consider alternative options like cosigning a private student loan.

Explore further: Car Loans for First Time Buyers with No Credit

If you're rejected for a Parent PLUS Loan, your student may be eligible for more federal student loans at a lower interest rate.

You can explore other federal student loan options that might be available to your student. The only difference is it may not be for as much money.

Your student could still have to find other methods for filling remaining financial aid gaps, like a private student loan.

A unique perspective: Which Federal Loan Servicer Should I Choose for Consolidation

You can't transfer repayment responsibility of Parent PLUS loans to the student, so consider cosigning a private student loan for them if you want them to ultimately be responsible for the debt.

There are several repayment plan options available for Parent PLUS loans, including the income-contingent repayment plan, which allows for lower monthly payments if you qualify.

The income-contingent repayment plan requires income verification and can result in higher payments than plans available to students.

You can also consider consolidating your Parent PLUS Loans to one federal direct loan, which may make you eligible for other repayment plans, such as an income-driven plan.

Consolidation means combining all your loans into a single loan, and you can potentially choose a repayment plan for up to 30 years to keep payments low.

However, keep in mind that extending the term may result in paying more over the life of the loan.

Here are some repayment plan options available to you:

It's also worth noting that you can always repay student loans early without penalty, so it may help to choose a longer, more affordable repayment option and make extra payments.

Borrowing limits for Parent PLUS Loans are quite generous, with no limit to the amount you can borrow, as long as it covers the cost of attendance minus other financial aid and scholarships.

This can be a big help if your student's financial aid package doesn't cover everything, or if you can't meet the college's Student Aid Index (SAI) number.

The interest rate on a Parent PLUS Loan is 9.08%, which is fixed and set by the federal government each year.

Keep in mind that there's also an origination fee of 4.228% on PLUS Loans, which is deducted before the loan is applied to your student's financial account.

The Department of Education has a useful Loan Simulation Tool to help you estimate repayment on potential student loans, which can give you a better idea of what your student loan debt will look like.

Intriguing read: One Main Secured Loan