The maximum amount you can borrow on a Parent PLUS Loan is the full cost of attendance (COA) as determined by the student's educational institution.
Unlike other federal student loans, there are no explicit, fixed borrowing limits set by the government for Parent PLUS loans. Instead, the maximum amount is tied directly to the specific school's published cost of attendance for the academic year, minus any other financial aid the student receives.
Understanding the Cost of Attendance (COA)
The Cost of Attendance is an estimated budget calculated by each college or university. It represents the total amount it will cost a student to attend that institution for an academic year. The COA encompasses a range of expenses, including both direct costs billed by the institution and indirect costs associated with attending.
- Direct Costs: These are charges billed directly by the educational institution.
- Tuition and Fees: The primary cost for instruction and school services.
- Room and Board: If the student lives in on-campus housing and participates in a meal plan.
- Indirect Costs: These are estimated expenses not billed directly by the school but are essential for attendance and living.
- Books and Supplies: Costs for textbooks, course materials, and other academic supplies.
- Travel Expenses: Funds to cover transportation to and from campus.
- Living Expenses: This includes food, housing (for off-campus students), and other personal costs.
- Miscellaneous Personal Expenses: Allowance for incidentals and personal care items.
How the Borrowing Limit is Determined
The educational institution calculates its COA annually, taking into account various factors specific to its programs and location. For Parent PLUS Loans, the maximum amount you can borrow is the school's COA minus any other financial aid the student has already received (such as scholarships, grants, or other federal student loans).
Example:
If a university's Cost of Attendance for an academic year is $50,000, and the student receives $10,000 in scholarships and $5,500 in federal Direct Subsidized/Unsubsidized Loans, the maximum Parent PLUS Loan amount available to the parent would be:
$50,000 (COA) - $10,000 (Scholarships) - $5,500 (Direct Loans) = $34,500
Important Considerations for Parent PLUS Loans
- Institutional Variation: Since the COA varies significantly between different institutions and even between different programs at the same institution, the maximum borrowing limit for a Parent PLUS Loan is not universal.
- Credit Check: Eligibility for a Parent PLUS Loan requires a credit check. Parents with an adverse credit history may need an endorser or may appeal the decision to qualify.
- Interest Accrual: Interest begins to accrue on Parent PLUS Loans as soon as the loan is disbursed. This means the loan balance starts growing immediately, even while the student is still in school.
- Repayment: Repayment typically begins 60 days after the loan is fully disbursed, though deferment options may be available while the student is enrolled at least half-time.
For more detailed information on Parent PLUS loans, you can visit the official Federal Student Aid website: studentaid.gov
