How to apply for federal parent Direct PLUS Loans

Even if you’ve contributed to a college fund over the years, you may not have enough set aside by the time high school graduation comes around to pay for your child’s college tuition — a potential reality, given the rising cost of attendance. If your savings come up short, you’ll need to rely on financial aid. One option is to apply for a federal Direct PLUS (Parent Loan for Undergraduate Students) loan to help fill the gap.

It’s important to know that every borrower who applies for the Direct PLUS loan receives the same rate, meaning that if you have great credit and solid income, you will get the same rate as a borrower who doesn’t meet those same standards.

Are you eligible for a federal Direct PLUS loan?

Parents need to meet several requirements to qualify for a federal Direct PLUS loan:

• First, you have to be the biological or legal adoptive parent or, in some cases, the stepparent of a dependent undergraduate student who's enrolled in an eligible college at least half time.
• You also have to pass a credit check. If you have what's called an "adverse credit history," you can either apply with an endorser, which is essentially a cosigner, or prove that there are extenuating circumstances relating to your poor credit.
• Finally, you and your dependent student must meet the general eligibility requirements to receive federal student aid. This includes demonstrating a financial need for student loans, being a U.S. citizen or eligible non-citizen, and being enrolled in a qualifying program or school.

How to apply for a federal Direct PLUS loan

If you meet all the above requirements, applying for a federal Direct PLUS loan is a fairly straightforward process. It's free and can be done online through the Department of Education website.

1. Start by completing the Free Application for Federal Student Aid (FAFSA^®) with your child. This form needs to be filled out each year in order to receive federal aid, including federal student loans.
2. Next, use your FSA ID and password (the same one you used to complete the FAFSA) to log in to StudentLoans.gov. Be sure you use your own FSA ID and not your child's.
3. From here, you can complete the Direct PLUS loan application, which takes about 15 minutes.
4. If you're approved, you'll be presented with a Master Promissory Note (MPN) that must be completed in order to receive your funds.

Proceed with caution

As a parent, you want to help your kids get a leg up in life any way you can. If you have the means, borrowing a parent Direct PLUS loan could be an affordable way to lend a hand to help them complete their education.

Before you apply, however, be sure that you understand what taking on a parent Direct PLUS loan means. Compare the Direct PLUS loan to private loan options. Parent Direct PLUS loans have fees — typically at least 4% — which are added to the loan amount. Parent Direct PLUS loans also have much higher interest rates (around 7%) compared to federal loans for undergraduate student borrowers (with rates as low as 4.5%). And because the lending limits for parent Direct PLUS loans are higher than for student borrowers, you may find yourself taking on more debt than you can realistically pay off — and that can have a negative impact on your future financial goals, including retirement. Compare parent Direct PLUS loans versus private loan options by clicking here. And, talk to your financial advisor about the best course of action for your family when it comes to paying for college.

Made ready for college

Ready to take the next step? Click here for additional information about how to pay for college. You can also call 1-888-411-0266 or stop by your nearest Citizens branch.

I've had financial trouble in the past, should I go into a branch more often than others?

The short answer is again, yes. The more detailed answer is that in talking to a banker in person they may be able to provide solutions you hadn’t considered before or explain the reasoning behind why certain options are better than others. Either way it’s a great opportunity to gain professional insight into financial options that wouldn’t be available to you otherwise.

If you’re ready to make the most of your personal banking experience give us a call or visit a local Citizens branch to speak with one of our dedicated bankers today.