Susan E. Thomas CPA
Are any federal financial aid programs for parents of college students?

Yes. Although most financial aid is awarded directly to students, one major federal financial aid loan program is available to parents to assist them in paying their child's college expenses. This loan is called the Parent PLUS Loan.

Parent PLUS Loans are available to any creditworthy parent of a student attending college at least half-time in an undergraduate degree or certificate program offered by an accredited post-secondary educational institution, including vocational or trade schools.

Parents can borrow up to the full cost of their child's education (which may include tuition, fees, room and board, books, and supplies), minus any other financial aid received. For example, if the cost of education is $65,000 and the student receives aid totaling $25,000, a parent would be eligible to take out a $40,000 PLUS Loan.

The interest rate is fixed for the life of the loan and the rate on new loans is reset each June. The current interest rate on PLUS Loans issued for the 2018/2019 academic year (July 1, 2018 through June 30, 2019) is 7.595% (7% in 2017/2018). Disbursements are made directly to the school, usually in two equal installments. Interest begins accruing upon the first loan disbursement, and parents must begin to repay the loan within 60 days of the last disbursement for that academic year.

To apply for a PLUS Loan, parents must fill out a PLUS Loan application and a master promissory note. In most cases, parents will also need to file the federal government's financial aid application, the FAFSA, so the college's financial aid office can officially "certify" (approve) the loan. Check with your school's financial aid office on their policy. Parents will also be subject to a credit check.

Graduate and professional students can also borrow under the PLUS Loan program too (these loans are called Grad PLUS Loans). the interest rate is the same as for Parent PLUS Loans.

Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011