Are Parent PLUS Loans Considered Student Loans?

Parent PLUS Loans are federal student loans made through the Direct Loan Program or the Federal Family Education Loan Program, depending on when the child for whom the loans were borrowed went to school.

Parent PLUS Loans are student loans made by the federal government to parents so that they can pay the cost of attendance for their child’s education. All Parent PLUS Loans are federal student loans, but the U.S. Department of Education doesn’t own all parent loans.

Some Parent PLUS Loans were made by private lenders and are owned by third-party guaranty agencies. Those loans were made to parent borrowers before 2011.

Although banks made those loans instead of the government, they’re not private student loans. Those Parent PLUS Loans are federal loans made under the Federal Family Education Loan Program. They are typically serviced by companies like AES, Navient, and Nelnet.

FFEL Parent PLUS Loans aren’t eligible for President Joe Biden’s student loan forgiveness plan. But they may be eligible for the Public Service Loan Forgiveness and Income-Driven Repayment Plan Forgiveness Programs. They also can be repaid under the income-contingent repayment plan.

Related: How to Apply for $10k Student Loan Forgiveness

Today, some banks and online lenders offer private parent loans. Interest rates for those loans are often lower than the rates for FFEL and Direct Parent PLUS Loans. They also typically don’t charge an origination fee. And if they do, it’s often substantially lower than the 4.228% fee the government charges.

What borrowers gain in savings with private parent loans, they lose in added benefits. Unlike federal Parent PLUS Loans, monthly payments for private student loans can’t be lowered because you lost your job or got sick. At best, some lenders offer a deferment or forbearance for a handful of months at a time. Once that time is up, they’ll expect you to start making payments for the full amount due. Similarly, private loans aren’t eligible for forgiveness or cancellation options. The only way out is to pay the loan balance in full.

Related: How to Refinance Parent PLUS Loans

Most Parent PLUS Loans are Direct PLUS Loans made under the Direct Loan Program, but some older parent student loans are FFEL Loans. Direct Loans all have fixed interest rates for the life of the loan and can be eligible for income-based repayment options and loan forgiveness programs — but they’ll first need to be consolidated into a Direct Consolidation Loan.

Related: Parent PLUS Loan Forgiveness

To find out what type of loan you have, visit the Federal Student Aid website, StudentAid.gov, or contact your loan servicer.

The Education Department allows parents of dependent undergraduate students to borrow federal loans to cover their college costs. Good credit isn’t needed to qualify or to get a lower interest rate. Parents with bad credit don’t pay higher interest rates. All parent borrowers get the same rate no matter their credit score.

Not every parent will qualify. The department will reject your PLUS loan application if a credit check shows you’ve recently defaulted on a debt, gotten a bankruptcy discharge, or had your wages garnished. If you have an adverse credit history, you can still get a Parent PLUS Loan, but you’ll need an endorser — i.e., a cosigner — to sign the master promissory note.

To apply for a parent loan, your child will need to first complete a Free Application for Federal Student Aid (FAFSA) application. The school will generate a financial aid package. If that award’s not enough to cover your child’s cost of attendance, then you can start the process of borrowing student loans to pay for their college education.

Parent PLUS Loans are considered student loans. They’re federal student loans, which qualify for many of the same benefits available to other student loan borrowers, including the Biden administration’s debt relief plan.

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