A Parent PLUS Loan allows parents to borrow funds in order to pay for a child's college tuition. These loans are backed by the federal government and require that parents meet certain criteria, including income and credit requirements.
Parents are allowed to borrow up to the maximum out-of-pocket costs for their child's education on an annual basis. Students who are receiving scholarships or other financial aid have that amount deducted from the total costs. Interest rates are determined on a yearly basis; however, once a parent takes out a loan, the interest rate remains the same for the life of the loan.
In order to obtain a Parent PLUS Loan, parents should first contact the financial aid office at the school their child is attending. The school may request that the parents fill out the FAFSA form in order to determine whether or not the student qualifies for additional financial aid.
It is also important to remember that PLUS loans cannot be discharged in bankruptcy, and that repayment may be required before the student graduates. Parents do have the ability to defer payments until after their child graduates, and a forbearance may also be available in the event of financial difficulties.