PLUS Loan Basics: What You Need to Know

The federal Direct PLUS Loan for parents is a common option for families who need more money to pay the full cost of college. It’s often included in colleges’ financial aid award packets to make up the difference between other types of aid and the cost of attendance but, like student loans, you are not required to accept a PLUS Loan.

Before taking out a PLUS Loan, carefully consider its features, benefits and drawbacks.


  • Availability: The PLUS Loan is available to biological and adoptive parents, and in some cases stepparents, who do not have adverse credit history.
  • Limits: A parent can borrow up to the cost of attendance amount determined by the student’s school minus other financial assistance received by the student.
  • Interest Rate: The PLUS Loan has a fixed interest rate, currently at 7.00% for the 2017–2018 school year. The rate for the 2018–2019 year will be set on July 1.
  • Fees: An additional loan fee is calculated as a percentage of the loan amount (currently 4.264% for disbursements on or before Sept. 30, 2018) and is deducted from each disbursement.
  • Repayment: Borrowers may choose from federal repayment plans to repay the loan over 10 to 25 years. Repayment generally begins as soon as the loan is disbursed, but you may defer the payments while the student is enrolled at least half time plus an additional six months.


  • Cash flow: Obtaining a PLUS Loan before a college bill is due allows some parents to pay for the entire term without financing fees or late penalties and then make payments on the loan as cash becomes available during the term.
  • Pre- and overpayment: Some parents choose to make extra payments without penalty to pay down PLUS Loans more quickly and to lessen the impact of interest.
  • Federal repayment options: You may choose from among federal repayment plans (not all are available for PLUS Loans). PLUS Loan servicers also offer deferment and forbearance options if you have difficulty making payments, but be aware that interest continues to accrue daily even when payments are not required and unpaid, accumulated interest will be capitalized, or added to the loan balance at the end of the deferment or forbearance period.
  • Death and disability: The loan can be discharged if the parent borrower dies or becomes totally and permanently disabled. In addition, the loan can be discharged if the student dies.
  • Cancellation: If already taken out, you can cancel all or part of the amount before the loan is disbursed. After disbursement you have a little time to cancel all or part by contacting the school financial aid office.


  • Discharge: Federal PLUS Loans are rarely discharged for financial difficulties resulting from unemployment, age-related or other illnesses and injuries, or bankruptcy.
  • Nontransferable: You cannot transfer the PLUS Loan to your student to repay after your student finishes school. You and your student may be able to work together to refinance the loan in the student’s name through a private lender; doing so will result in the loss of federal repayment options.
  • Timing: Many parents face repayment of heavy loan debt burdens at a time of life when earning power generally decreases and limited income is needed for living or medical expenses. Default on a PLUS Loan can lead to the garnishment of Social Security benefits, tax refunds and wages.

Other Considerations
The following items could be considered a drawback or a benefit, depending on personal and other circumstances.

  • Qualification: Approval for a PLUS Loan does not take into consideration income, other outstanding debt, assets, income or years to retirement, so consider carefully how much you will realistically be able to repay.
  • Interest: The fixed interest rate will not increase during the life of the loan, but you won’t be able to take advantage of lower market rates in the future.

Before taking on a PLUS Loan, you should also compare it to other options, such as our College Family Loan.

By: Iowa Student Loan

Iowa Families Can Win Cash for Educational Expenses

Iowa high school students and their families can enter weekly drawings for two $250 awards, and Iowa high school seniors can enter a grand prize drawing for two $1,500 awards by completing a free online tool that helps them estimate the total cost of a four-year undergraduate degree.

Learn more and enter the giveaway today!

Iowa high school students, and their parents or guardians, can enter their information for the drawings after completing the College Funding Forecaster until May 11. The free online tool provided by Iowa Student Loan uses information from students’ freshman year financial aid award packets, as well as outside scholarships and grants and family savings and earnings, to project estimated costs, funding gaps and potential student loan debt over four years.

“We want to help families make the connection between first-year costs and the total financial investment in a college education,” said Steve McCullough, president and CEO of Iowa Student Loan. “This tool helps them see how their costs might increase, what happens when one-year scholarship awards are exhausted, and how the family and student contributions can play a role in reducing overall costs.”

The tool allows families to customize both expenses and available funding to adjust results for changes in students’ situations over the four years. The results show yearly and total estimated costs of attendance, available funding and projected funding gaps. The tool also provides informational tips on how to reduce costs and potential debt.

After viewing their results, users have the opportunity to enter the drawings. Two names will be drawn each week to receive $250 awards for educational expenses. In a grand prize drawing, two names will also be drawn to each receive $1,500 for the students’ college expenses in fall 2017. The grand prizes will be paid directly to the students’ colleges.

For details and complete rules for the giveaway, visit Or, to begin the College Funding Forecaster and enter the giveaway, go to

By: Iowa Student Loan

10 Budget Tips for Spring Break (Infographic)

Download Infographic as a PDF.

Spring break can mean fun, sun and no worries, unless you blow your budget. Use these tips to help you stay on track during break and save your money for your education.

1. Plan ahead.

Start scouting for sales and less-expensive options early. Check out flights, hotels, destinations and activities so you don’t pay more for last-minute decisions. Read reviews of the activities or venues you want to include to see if they’re worth the cost. Also, pack everything you’re likely to need to avoid tourist prices on sunscreen, sunglasses, raingear, chargers and attire.

2. Take a cheaper flight.

Airfare is expensive, especially during high traffic times like spring break. But you can save some money by flying discount airlines, at off-peak times and days, non-direct and through alternate airports. In addition, check to see whether you can save by sitting separately from your companions and avoiding baggage fees.

3. Drive or ride instead of flying.

Buses and trains may get you where you want to go at a big savings. Or, get together with friends to share a road trip to your destination. These may take longer than flying but can be as much fun as the destination.

4. Take the road less traveled.

The beaches of the eastern seaboard are often less crowded than those of Florida, Mexico or Texas during spring break and can offer savings. Maybe this is the ideal time for you to explore the mountains or the desert and avoid the party scene.

5. Stay for less.

Apps and sites like Airbnb, VRBO and can point you to less expensive lodging wherever you decide to go. Consider camping if you’re driving—government-owned sites are often least expensive, and you can even rent camping gear. To spend even less, stay with someone you know. Check out options for your final destination and lodging along the way.

6. Save on activities.

Look for discounts before you go through memberships like Costco and AAA, as well as apps like RoadTrippers, Groupon and Living Social. Also, an Internet search may turn up promotional codes you can use when you book. Once you arrive, some places may offer a discount if you show your student ID, and look for coupon books in the lobbies of hotels.

7. Save on food.

Depending on how you’re traveling, it may make sense to stock up on food for meals and snacks as well as beverages before you leave. If you’re flying, look for discount chains once you arrive. Preparing your own food will save on high restaurant and venue costs. See more tips for budget dining on spring break. <link to other post>

8. Avoid impulse buying.

It’s tempting to pick up a memento of your trip or to indulge yourself. Think about whether that coconut mug or t-shirt will get any use when you get back, or if the signature drink is worth the cost. Set a budget for each day and stick to it. You could even only bring the amount of cash you want to spend with you, leaving your credit card and extra cash in the hotel safe.

9. Use your legs.

Instead of renting a car, taking cabs or using Uber, consider renting a bike or simply walking where you need to go at your destination.

10. Stay out of trouble.

Avoid large fines and penalties by knowing and abiding by the laws at your destination, including those for driving, consuming alcoholic beverages and noise.

By: Iowa Student Loan