PLUS Loan

DEFINITION of 'PLUS Loan'

A low-cost student loan offered to parents of students currently enrolled in post-secondary undergraduate education. With a PLUS Loan, also known as a Direct PLUS loan, the parent borrows money on the student's behalf. To be eligible for a PLUS Loan, a student must be enrolled at least half-time, and the parent has to pass a standard credit check. Graduate and professional-degree students can take out PLUS loans on their own behalf.

BREAKING DOWN 'PLUS Loan'

The major benefit of a PLUS Loan is that the parent can borrow the entire amount the student needs for his or her education. This includes housing, tuition and other related expenses. The maximum available is "the cost of attendance (determined by the school) minus any other financial assistance received," according to the Federal Student Aid website. Another notable benefit is that the borrower does not have to demonstrate financial need to be eligible for the loan.

For a parent PLUS loan, the student must be a dependent of the parent (biological, adoptive, or in some cases stepparent). Any student benefiting from a PLUS loan must be enrolled in a school that participates in the Federal Direct Student Loan Program.

RELATED TERMS
  1. Perkins Loan

    A loan program that provides low-interest student loans to undergraduate ...
  2. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students ...
  3. Stafford Loan

    A type of federal, fixed-rate student loan that was available ...
  4. Lifetime Learning Credit

    A provision of the U.S. federal income tax code that lets parents ...
  5. Student Loan Interest Deduction

    A tax deduction for interest paid on higher education loans during ...
  6. Student Debt

    Money owed on a loan taken out to pay for educational expenses. ...
Related Articles
  1. Managing Wealth

    Parents: Beware of Taking Out a Direct PLUS Loan

    Direct PLUS loans are heavily advertised to parents who want to help support the financial costs of their child's education, but are they a good idea?
  2. Markets

    A Beginner's Guide to Getting Student Loans

    Follow these 5 steps and you'll be well on your way to knowing which loans to go after – and which college really offers you the best deal.
  3. Personal Finance

    The Booby-trapped World of Parental College Loans

    Private parent loans can help families pay for college. But the repayment timeline associated with the loans can hurt parents’ retirement savings.
  4. Financial Advisor

    The Pitfalls of PLUS College Loans

    Here's how parents can avoid the pitfalls of PLUS Loans when it comes to funding their children's college education.
  5. Personal Finance

    College Loans: Private vs. Federal

    Not all student loans are the same. Know what you're getting into before signing on the dotted line.
  6. Personal Finance

    Top Student Loan Providers

    Many banks and institutions offer student loans, but some offer better deals than others. Read this list of top student loan providers before you borrow.
  7. Investing

    10 Ways Student Debt Can Destroy Your Life

    If you're getting a student loan, think critically about how you will manage your loan. Student debt could have a profound negative impact on your life.
  8. Markets

    Student Loan Asset-Backed Securities: Safe or Subprime?

    Similar to the mortgage-backed securities that caused the 2008 recession, student loan asset-backed securities could lead to the next financial crisis.
  9. Personal Finance

    Don’t Fail Student Loan Debt 101

    Don't be a statistic! According to a recent study, six in 10 Millennials don’t know what they owe or what to do with student loans after they graduate.
  10. Investing

    What Happens To Your Student Debt If You Die?

    What happens to student debt when you die? It all depends on the lending agency.
RELATED FAQS
  1. Why are private student loans generally more expensive than federal loans?

    Make the right decision between a federal student loan and a private student loan when looking for financial aid for your ... Read Answer >>
  2. Student loans, federal and private: what's the difference?

    Learn about the differences between federal and private student loans, and discover the types of federal funding available ... Read Answer >>
  3. Is it legal to invest my student loan money?

    Take a risk investing student loans and encounter a legal and moral gray area as well as possible financial challenges along ... Read Answer >>
  4. What special powers does the government have to collect student loans?

    Contact student loan companies before student loans default, as the government has the power to get its money. Prior to default, ... Read Answer >>
  5. Are Sallie Mae loans considered federal loans?

    Identify the differences between federal and private student loans, explore the qualities of each type of loan, and find ... Read Answer >>
  6. What is the difference between certified and non-certified private student loans?

    Learn the main differences between certified and non-certified private student loans, and see why non-certified student loans ... Read Answer >>
Trading Center