Miranda is an award-winning freelancer who has covered various financial markets and topics since 2006. In addition to writing about personal finance, investing, college planning, student loans, insurance, and other money-related topics, Miranda is an avid podcaster and co-hosts the Money Talks News podcast.
As a 30+ year member of the AICPA, Nancy has experienced all facets of finance, including tax, auditing, payroll, plan benefits, and small business accounting. Her résumé includes years at KPMG International and McDonald’s Corporation. She now runs her own accounting business, serving several small clients in industries ranging from law and education to the arts.
Parent PLUS loans are federal loans taken out by parentsânot studentsâto help pay for a dependent undergraduateâs college costs. The parent is legally responsible for repaying the debt. For new loans beginning July 1, 2026, borrowing is limited to $20,000 a year and $65,000 total for each student.
What are the disadvantages of parent PLUS loans?
Parent PLUS loans typically have higher interest rates than federal loans for students, and interest begins accruing as soon as the loan is disbursed. Parents also have fewer repayment and forgiveness options. Because the debt belongs to the parent, payments can compete with retirement savings and other financial goals.
How much can parents borrow with a parent PLUS loan?
For new parent PLUS loans beginning July 1, 2026, parents can borrow up to $20,000 each academic year for a dependent student, with a $65,000 aggregate limit for that student. Thatâs a major change from the previous system, which generally allowed borrowing up to the cost of attendance minus other financial aid.
In a list of lifeâs certainties, death and taxes come to mind. But hereâs a third: the rising cost of a college education. If youâre like many parents, after you get that financial aid letterâincluding any scholarships, loan offers, and suchâyouâll likely still have a gap to fill in order to pay all the costs of college.
A parent PLUS loan can help fill that gap by allowing you to borrow to help pay your childâs college costs.
But is a parent PLUS loan the right move for you and your finances? Understanding how these loans work, including their costs and repayment options, can help you decide.
Key Points
Parent PLUS loans often have higher interest rates than other student loans.
Before taking on debt for your childâs education, consider your retirement and other long-term goals.
Other options, such as community college and loan forgiveness programs, may work better for your long-term outlook.
What is a parent PLUS loan?
When you fill out the Free Application for Federal Student Aid (FAFSA), you and your student might discover there isnât quite enough student aid available to completely cover the cost of attending college. A parent PLUS loan, available through the federal Direct PLUS Loan program, can help fill that gap by allowing you to borrow to help pay for your childâs college costs.
Already have a parent PLUS loan?
If you borrowed a parent PLUS loan before July 1, 2026, different repayment rules apply, depending in part on whether you consolidated your loans. Some existing borrowers can access income-contingent repayment (ICR) through a Direct Consolidation Loan. Check your loan date and available repayment options before changing repayment plans or consolidating your loans.
Before July 1, 2026, parents could generally borrow up to the schoolâs cost of attendance minus any other financial aid their child received. Beginning July 1, 2026, new parent PLUS borrowing for the academic year is capped at $20,000 for each dependent student, with a $65,000 aggregate limit for that student. Some parents who borrowed before July 1, 2026, may qualify for an interim exception that temporarily preserves the previous limits.
So if federal grants, loans, and other financial aid arenât enough to take care of the costs of college, the rest can be covered by youâin the form of debt.
Be the parent (biological, adoptive, or step) of a dependent undergraduate student attending school at least half-time.
Not have an adverse credit history (as described by the Department of Education).
Be able to meet the general requirements for student aid, which are determined when your child fills out the FAFSA.
If you qualify, you can use the parent PLUS loan online application and submit it to the school. As the parent borrower, youânot your childâare responsible for repaying the loan.
Pros and cons of parent PLUS loans
Pros
Cons
Easier credit requirements than private loans.
The interest rate for PLUS loans is higher than for other federal loans, and interest begins to accrue immediately upon disbursement of funds.
The debt is yours, and youânot your childâare responsible for repaying it.
Payments can generally be deferred while your child is enrolled at least half-time and for six months afterward.
PLUS loan payments can reduce your ability to save for retirement, get additional loans, or reach other financial goals.
Should you get a parent PLUS loan?
Although it can be easier to get a parent PLUS loan than a private student loan, it might also come with a higher interest rate. If student loans are enough to bridge the college funding gap without a PLUS loan, it might make more sense to have your student do the borrowing.
Parent PLUS loans have fewer repayment and forgiveness options than federal loans taken out by students. New parent PLUS loans made on or after July 1, 2026, arenât eligible for the Repayment Assistance Plan (RAP), the income-driven plan that bases a student borrowerâs monthly payment on income and family size.
Finally, consider that having parent PLUS loans can affect your ability to meet other financial goals. You might be unable to set aside enough for retirement. If youâre hoping to get a loan for a major purchase like a home or a car, the parent PLUS loan might make it more difficult to get approved.
What happened to Grad PLUS loans?
Grad PLUS loans are no longer available to new borrowers as of July 1, 2026. Graduate and professional students who received a Grad PLUS loan for their current program before that date may continue borrowing under the previous rules for up to three academic years or until they complete the program, whichever comes first.
Alternatives to a parent PLUS loan
You donât have to get a parent PLUS loan to help your child attend college. The earlier you start planning for college costs, the more likely youâll be able to avoid borrowing to pay for your childâs school. You may also be able to reduce the amount your child needs to borrow for college.
Save ahead of time. If you still have time on your side, start saving now. Consider putting money aside in a 529 plan or Coverdell account, or find other ways to save.
Consider community college. Instead of starting at a more expensive four-year school, consider encouraging your child to start at a community college. For the 2025â26 academic year, average published tuition and fees are $4,150 for in-district students at public two-year colleges, according to the College Board. Compare that figure to $11,950 for in-state students at a public four-year school. And thatâs not even considering the cost of room and board. Your student could save tens of thousands of dollars by starting at a community college and finishing at a four-year school.
Military service. Military education benefits can help cover college costs through programs such as the GI Bill and military tuition assistance. ROTC scholarships may also cover some or all tuition and other education expenses in exchange for a service commitment.
Working during school. Reduce the need for debt by encouraging your child to work during school. Federal Work-Study can help enhance financial aid and ensure some income during college.
Loan forgiveness and repayment assistance. Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness, and the National Health Service Corps offer programs that can forgive or help repay student loan debt for eligible borrowers.
The bottom line
Helping your child pay for college can give them a financial head start, but taking on parent PLUS loans can come at the expense of your own financial goals. Although you should consider what you can contribute to your childâs education, donât forget about your duty to yourself. Youâre also responsible for setting up a comfortable retirement. Assistance you provide to your child shouldnât prevent you from reaching your own goals.
