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Many parents want to help their children pay for college — or even cover the cost entirely. But with average all-in costs of $24,920 for in-state public universities and $58,600 for private ones in the 2024–25 school year, you may not be able to pull it off.1
Nearly 610,000 parents took out Parent PLUS Loans with an average amount of $18,462, according to the National Association of Student Financial Aid Administrators, a nonprofit membership group representing financial aid professionals.
But just because 610,000 other people are doing it, does that mean you should too? And for four years per child?
Here’s what to know before you borrow.
What are Parent PLUS Loans?
Parent PLUS Loans are federal student loans that a student’s biological or adoptive parents (and, sometimes, stepparents) can take out if other financial aid falls short.
● More than one parent may take out a PLUS Loan for the same student.
● Parents’ combined loans can’t exceed borrowing limits.
Parent PLUS Loans can only be used on qualified educational expenses for dependent undergraduate students. Qualified educational expenses include tuition, fees, books, supplies, equipment, and special-needs services.
If your loan is approved, the school receives the funds and applies them to tuition and other charges. Any remaining funds may go to the parent or student.
Borrowing limits for Parent PLUS Loans
Parent PLUS Loans can be used to borrow the full cost of a child’s education (minus financial assistance) for the 2025–26 school year.
However, the One Big Beautiful Bill law signed in July 2025 changes Parent PLUS Loans, effective July 1, 2026.
● It caps annual Parent PLUS borrowing at $20,000 per student per year (not per parent), unless the designated school sets a lower, program-wide limit.
● It limits total Parent PLUS borrowing to $65,000 per student.
Students in school during this transition can be grandfathered in under the old rules. The previous policy allowed parents to borrow up to their child's full cost of attendance.
“For example, if a child's parent already has a Parent PLUS Loan borrowed for their freshman year before July 2026, then they can continue to borrow up to the cost of attendance until they finish their degree three years later,” said Meagan McGuire, a Certified Student Loan Professional (CSLP®). She works for Student Loan Planner, a company that helps student loan borrowers get out of debt.
Parent PLUS Loan credit requirements
Unlike student borrowers, parents must have acceptable credit (but the bar is pretty low). Potentially disqualifying conditions include accounts sent to collections in the past two years and bankruptcy in the past five.
Still, parents who don’t qualify at first may be approved if they can get a cosigner (who can’t be the student) or can demonstrate that extenuating circumstances led to their credit problems. They will also have to complete PLUS Loan Credit Counseling.
The parent’s income and ability to repay the loan are not considered.
If the student’s parents are denied completely, the student becomes eligible to borrow more through federal Direct Unsubsidized Loans. Unsubsidized means loan interest accrues while the student is in school.
Parent PLUS Loans: Impact on FAFSA
A student must submit the Free Application for Federal Student Aid (FAFSA) each year to be eligible for federal loans, including Parent PLUS Loans.
“Many people skip the FAFSA because they assume they make too much money, but it's a pivotal tool to qualify for various forms of financial aid, including federal loans and work-study programs, as well as institutional aid,” said Kat Tretina, a certified student loan counselor.
It’s important to exhaust all other federal student aid before applying for a Parent PLUS Loan. Otherwise, the loan could disqualify the student from more generous forms of assistance. (Related: How to make college more affordable with financial aid)
Parent PLUS Loan interest rates and fees
The Department of Education sets Parent PLUS Loan rates each year. The rate:
● Is the same for all borrowers.
● Can’t exceed 10.5 percent.
● Applies to loan amounts disbursed (not just approved) from July 1 through June 30.
● Is fixed and stays the same for the life of the loan.
Borrowers also pay a loan origination fee of 4.228 percent, which is subtracted from the loan disbursement. You’re borrowing and paying interest on a fee that immediately cannibalizes part of the loan.
Parent PLUS Loans vs. Federal Direct Loans
An undergraduate student may receive a subsidized federal loan of up to $5,500 annually depending on their demonstrated need and year of school. "Subsidized" means the government pays the interest while the student is in school at least half time and for six months after graduation. (Related: Is student loan debt worth it? A cost-benefit analysis of college)
Unsubsidized loans are available without regard to demonstrated need. Interest accumulates from the moment these loans are disbursed. Students can borrow up to $7,500 in both subsidized and unsubsidized loans depending on their year of school.
Reducing Parent PLUS Loan costs: Tax credits, deductions, and cancellations
There’s no reason to borrow the maximum unless you have to. The American Opportunity Tax Credit could provide up to $2,500 each year for four years. And savings from the student loan interest deduction could offset part of next year’s tuition.
You can also cancel all or part of a Parent PLUS Loan — without paying interest or fees — within 120 days of disbursement. (Learn more: How to reduce the cost of college by up to half)
Federal or private?
Parent PLUS Loans used to offer clear advantages over private loans, McGuire said.
● They are automatically discharged upon the death of the parent or child.
● Loans disbursed before July 1, 2026, may qualify for income-driven repayment and public service loan forgiveness.
Going forward, the decision comes down to rate and risk.
“If you can get a lower interest rate going private, go for it,” McGuire said.
But since private loans aren’t subject to federal discharge rules and policies vary by lender, you need a backup plan.
“The loan will still be outstanding against your estate: it doesn't die with you,” McGuire said. “So, [having] proper life insurance or assets in place to take care of that for your loved ones is smart.” (Related: What happens to a person’s debt when they die?)
The new rules also make deferment and forbearance, two options for pausing payments during hardships, less accessible. This change further reduces the distinction between federal and private student loans.
Repayment options for Parent PLUS Loans
Repayment options depend on when you borrow.
● Before July 1, 2026: Loans qualify for more flexible repayment, including public service loan forgiveness and income-driven plans (if consolidated and enrolled in time).
● Starting July 1, 2026: New loans only qualify for the new standard repayment plan. Parents lose access to income-driven repayment and most forgiveness options. Parents with existing PLUS loans who borrow more or consolidate risk losing these benefits on all their loans.
Parents can still request to defer repayment while their child is enrolled at least half time and for six months after graduation. Interest starts accruing at disbursement. If not paid, it gets added to the loan balance when deferment ends.
Making sense of all the rules can be confusing, so it’s good to know where to turn for help.
“StudentAid.gov is still the best resource for the latest and most in-depth information on federal loans,” Tretina said. “It can take several days for the site to get updated with the latest changes, but it's a reliable source of information.”
For existing Parent PLUS borrowers, your student loan servicer and The Institute of Student Loan Advisors are also good resources, Tretina said.
And, of course, a financial professional can always help sort out how student loan debt fits into your overall saving, investment, and retirement future. (Related: 3 ways a financial professional adds value)
Can students repay Parent PLUS Loans?
“A lot of families don't realize that children have no legal obligation to repay Parent PLUS Loans; they're solely the parent's responsibility,” Tretina said. “And, there's no way to transfer them to the child within the federal loan system. Carefully consider your own financial needs and retirement funding before taking on Parent PLUS Loan debt.”
After graduation, it may be possible to move the loan into the child’s name through student loan refinancing. With an income and good credit, your child could get a private loan to pay off the parent’s loan, McGuire noted. (Related: Families saving for college: A mutual approach)
Parent PLUS Loan default consequences
Consequences for defaulting on Parent PLUS Loans — not making a payment for 270 days or more — start with late fees, collection costs, attorney fees, court fees, and credit score damage. Then, they get worse.
“Default is very serious,” McGuire said. “The government has extraordinary collection powers. They can garnish wages at your job, garnish tax returns, and garnish Social Security income, too. You want to do your best to avoid default because if you're in repayment, you have more control over how much they can take.”
If you do run into problems, talk with your loan servicer to explore your options. For costly or complicated scenarios, it may be worth hiring a student loan expert. (Related: Digging out of Parent Plus debt)
Should I take out a Parent PLUS Loan for my child?
Borrowing for college is a major decision. Consider working with a MassMutual financial professional who can help you figure out how to minimize debt while supporting your child’s education.
Discover more from MassMutual…
9 ways to save on college...without a scholarship
How to find colleges that give the most financial aid
High school seniors: Tips for choosing the best ‘financial fit’ college
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