How PLUS Loans Work

By: Dave Roos

Parents can help their children with their college expenses by applying for a PLUS loan. See more college pictures.
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The average sticker price of a private U.S. college education in 2009-2010 was $26,273 a year. At public colleges, the cost averaged $7,020 a year. If those figures don't sound terribly high, remember that college is a four-year deal. You should also note that a whopping 20 percent of college students attend schools where the tuition and fees total more than $36,000 a year [source: College Board].

The good news is that close to 80 percent of full-time undergraduates received some form of financial aid in 2007-2008 [source: NCES]. But even after that student financial aid package comes in the mail, there is usually a balance left to pay. That's where PLUS loans can pick up the slack.


PLUS loans are federally subsidized loans taken out by parents of college students to help pay for their child's undergraduate education. The PLUS loan can be applied to all eligible educational expenses (tuition, room, board, books and supplies) that are not already covered by other financial aid funds like scholarships, federal work-study or loans.

In the 2007-2008 school year, 9.6 percent of parents with dependent undergraduate students received PLUS loans at an average loan amount of $11,400 [source: NCES].

For parents of college students, PLUS loans are more attractive than private bank loans because they have a relatively low, fixed interest rate for the life of the loan. And unlike most private loans, which need to be paid back immediately, PLUS loans don't have to be repaid until the student has graduated or stopped attended school at least half-time. There is no minimum amount for a PLUS loan, but there is a maximum: The total amount of the PLUS loan cannot exceed the total cost of educational expenses minus existing financial aid.

Like any good federal programs, PLUS loans have their share of confusing terminology and bureaucratic red tape. We'll do our best to walk you through the eligibility requirements and application process to help make your college education more affordable.