Federal PLUS Loans for parents are unsubsidized education loans for parents of dependent undergraduates. You can borrow a PLUS Loan if your child is 23-years-old or younger, dependent on you for financial support, and enrolled at least half time in an eligible program.

There are no income or other collateral qualifications required for this loan; approval is based on credit only. The credit standards are less stringent than general commercial loan requirements because the federal government guarantees that the lender will be repaid if the borrower defaults.

Parents contemplating taking a PLUS Loan to cover education costs should consider the following:

• Interest rate. Fixed interest rate of 8.5%.
• Fees. Will not exceed 4% of the loan. Some lenders waive a portion of the fees.
• Credit eligibility. Required to pass a credit check. If you don’t pass, you have the option to add an endorser with passable credit to co-sign your loan.
• Tax considerations. You may be able to deduct from your taxable income for the interest you paid on a student loan taken out solely to pay qualified education expenses. Visit www.irs.gov for more information.
• Borrowing amount. Entire cost of attendance less financial aid.
• Borrowing for all your children. Borrowing can cover the cost of attendance less financial aid for every child for all their years of college.
• Borrowing for school-related expenses. Cannot finance expenses in excess of cost of attendance, such as a commuting vehicle, travel home, furniture, and appliances. The amount must be certified by the school and the loan proceeds are co-payable to the school.
• Deferment and forbearance clauses. If economic difficulty arises, payment deferment or forbearance clauses will allow you to postpone some or all of your payments for a specified time period. Postponing payments may affect borrower benefit eligibility.
• Repayment. Begins within 60 days of final disbursement. Some lenders allow borrowers to postpone payment while the child is enrolled, however, interest will accrue and be capitalized on the principal, increasing the overall cost of the loan.
• Repayment plans. Some lenders may provide borrowers the choice of standard, income-sensitive, graduated, or extended (depending on loan balance) repayment.
• Liquidity, emergencies, and other expenses. Personal investments and savings are available for other purposes and emergencies. Sallie Mae offers money-saving benefits on PLUS Loans.

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