A direct PLUS loan is a loan issued by the U.S. Department of Education for graduate students and parents of undergraduate students to pay for education costs, according to Federal Student Aid. Loans are granted up to the cost of the student's education after other financial aid has been applied.
Students must complete the Free Application for Federal Student Aid to determine their eligibility for a direct PLUS loan, states Federal Student Aid. The financial aid office at the school provides application instructions if they determine the student or her parent's are eligible.
During the application process for a direct PLUS loan, a credit check is run on the applicant, advises Federal Student Aid. Applicants with poor credit may still be approved if they obtain an endorser with a good credit history or can document extenuating circumstances that led to the poor credit rating.