A student loan that’s a PLUS

If you’re struggling to find money to cover your college costs, and the school’s financial aid package doesn’t go far enough, there’s a special kind of loan that may be helpful.

It’s called a PLUS loan, which stands for Parent Loan to Undergraduate Students. With a PLUS loan, your parent actually agrees to borrow money for you. Your parent takes out the loan, and you use the proceeds to pay for tuition, textbooks, living expenses, or other needs.

PLUS loans are made by the U.S. Department of Education to parents of students who are enrolled at least half-time in an undergraduate (Associates or Bachelor’s degree) program at an eligible school. You can borrow up to the total cost of attending the school, less any other financial aid you may receive. Parents are expected to start making loan payments immediately, but can request a deferment until six months after you graduate. However, interest will continue to be applied during the deferment period.

To start the PLUS loan process, fill out the free FAFSA® form. When you receive your financial aid award information from your school, you’ll be able to see how much additional money you may need. Your parent can then apply for a PLUS loan at StudentLoans.gov. He or she will be required to undergo a credit check and sign a promissory note.

One important point about PLUS loans: because the loan is in your parent’s name, he or she is responsible for paying it back. If you promise to make the payments and fail to do so, your parent will have to.

PLUS loans are also available to students in graduate school and professional programs such as medical school. To learn more about this type of borrowing, visit StudentLoans.gov.

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