What is a Parent Plus Loan?

A Parent Plus Loan is a loan offered by the federal government which allows parents to borrow money to be able to pay for their children’s education. This is a loan taken out in the parent’s name and implies that they are the one financially responsible for it. Parent Plus loans are often a necessity to fund college when unsubsidized loans, scholarships, and grants are not enough.

5 Top Questions and Answers about Parent Plus Loans from Reddit

What are the terms of a Parent Plus Loan? How much money can I get from a Parent Plus Loan? What is the repayment like?

Many people who did not go to college or have to take out student loans do not know what a Parent Plus loan is or how it works. In this Reddit thread, you can read about the initial first questions about Parent Plus Loans.

• Parent Plus Loans have terms like a normal loan. You can read more about them here.
• You are able to borrow up to the total cost of attendance for your school. This includes tuition, room & board, and other expenses like books and transportation. If you are not offered enough money initially, you can request more from this government student aid link and it would ultimately be approved or disapproved by the individual school’s financial aid office.
• Repayment for Parent Plus Loans begin immediately after the entirety of the loan is disbursed. This means that there is not a grace period like some other loans have. It is possible to request deferment until your child has been out of school for six months. 

My parents are in extreme debt from Parent Plus Loans. What can I do?

One of the downsides of Parent Plus Loans is that they do fall on your parents. If they do not completely understand the amount of debt they are taking on or the repayment terms, it can grow quickly and create major issues. This Reddit thread goes into detail about the experience one family is having regarding Parent Plus Loans. Here are the recommendations from other users that may help you if you’re in a similar situation.

• Before taking a loan, make sure your parents understand the terms and conditions associated with taking out a Parent Plus Loan. First, the loan is in their name which means they are responsible for its repayment. Having an agreement with their child to repay the loan is very normal, but unless this is in official legal writing, the parent is ultimately responsible. 
• Consider if your parents qualify for PSLF (Public Service Loan Forgiveness). Under this option, once 10 years of payments are made, the rest is forgiven. This is a great option if your family is able to pay the full monthly payment for that time.
• Parent Plus Loans can be paid by other people than the person whose name the loan is under. If you have the means to do so, paying back a loan that was taken out for your advantage is respectable. Other people may also contribute to paying for the loan.  While the loan would still be in your parents name, Parent Plus Loans can be repaid for through anyone’s account.

Can Parent Plus Loan debt be transferred from the parent to the student?

Not exactly. A factor of Parent Plus Loans is that they are taken out in your parents name. Federal student loans in general cannot be transferred. Under this type of loan, it cannot be directly transferred to another person and remain a Parent Plus Loan. In this Reddit thread, a student is asking for options to help relieve his mother’s financial burden. Luckily, there are options to repay the debt, and to completely change the loan if that is the best option. Here are some choices you may have if you’d like to completely change the loan. 

• While loans can’t be transferred, they can be refinanced under someone else’s name, like transferring from a parent to a student. However, before deciding on this option, make sure you understand that you would be losing benefits of having a federal loan since refinancing takes place with private lenders. In circumstances where federal loans are more flexible, such as in the case of the Covid-19 pandemic, private lenders may not be able to accommodate the same.
• If you have the login information or access to give your parent money, you can make the payment yourself without having to change whose name it’s under. This is a great option to keep the benefits of a federal loan. However, you do keep the same interest rate which may be higher than with a private lender.

Can a parent force a child to pay back a Parent Plus Loan?

The short answer is no. A parent who has taken out a Parent Plus Loan is legally responsible to pay it back, not the student whom they took it out for. This can be tricky if you agreed to pay the loan back or if there is another factor like divorce or financial impacts. In this Reddit thread, a student talks about his position with divorced parents and financial agreements that he was not a part of. Here is some of the advice offered that may apply to your situation. 

• Keep your documents and agreements organized. Without written agreements between you and your parent, there is absolutely no financial obligation on your part. They can claim you owe them, but without written legal documentation, it is not enforceable.
• Again, make sure your parent understands the loan they are taking out. Lots of misconception about who pays back a Parent Plus loan stems from not understanding the loan from the time they take it out. Thoroughly going through the terms and conditions may save you trouble further down the road.

I paid off my Parent Plus Loan and my credit score went down, is this right?

Like any line of credit, a Parent Plus Loan affects your credit score. Meaning that paying it on time and keeping track of it can have positive effects, just as not paying it will have a negative effect. Paying off, or ending, a line of credit can make your score go down. This Reddit thread offers advice on why that is. 

• A student loan, including a Parent Plus Loan, may very likely be your oldest line of debt, meaning that closing it will slightly decrease your credit score. Ending a line of credit can decrease the life length of your credit score causing it to go down, but it will likely bounce back in a month or two.
• Only the person whose name the loan is in will have affected credit. This means that the parent, or person who legally owns the loan will either benefit or lose. Even if the student pays back the loan, their credit score will not be affected. 
• How unfortunate this reality is, be proud! Paying off a student loan is a long and sometimes difficult process, so celebrate your success. Your credit score will bounce back, but the student loan you paid off won’t.

Juno can help you to find a student loan or refinance a loan at the most competitive possible rate. We get groups of buyers together and negotiate on their behalf with lenders to save them money on private student loans and private student loan refinance loans. 

Join Juno today to find out more about your options for affordable private student loans to help fund your degree.