Getting approved for a Parent PLUS loan is generally accessible, especially for parents who might not have an excellent credit score. The primary factor determining approval isn't a high credit score, but rather the absence of an adverse credit history.
Understanding the Credit Requirement for Parent PLUS Loans
Parent PLUS loans are federal student loans specifically designed for parents of dependent undergraduate students. Unlike many private loans that heavily weigh a borrower's credit score, Parent PLUS loans operate on a different principle.
- Good Credit Not Required: Parent PLUS loans do not require good credit. This makes them an ideal option for borrowers who may have a limited credit history or an average credit score. The focus is not on your score, but on the presence of negative credit events.
- Adverse Credit History Is a Barrier: While a high score isn't necessary, you cannot have an "adverse credit history." This is the main hurdle for approval. The U.S. Department of Education defines what constitutes an adverse credit history, and if you meet these criteria, your loan application will likely be denied.
What Constitutes an Adverse Credit History?
According to federal guidelines, an adverse credit history typically includes:
- Bankruptcy discharge within the past five years.
- Foreclosure, repossession, tax lien, wage garnishment, or charge-off/write-off of a federal student loan debt within the past five years.
- More than 90 days delinquent on any debt, or having a debt that has been placed in collection or charged off during the past five years.
If your credit report shows any of these specific issues within the past five years, it will make it difficult to get approved for a Parent PLUS loan.
Navigating a Denial Due to Adverse Credit
Should your Parent PLUS loan application be denied because of an adverse credit history, there are still options available:
- Obtain an Endorser: You can apply with an endorser. An endorser is essentially a co-signer who does not have an adverse credit history and agrees to repay the loan if you do not. They take on the responsibility of the loan alongside you.
- Document Extenuating Circumstances: You may appeal the denial if you can demonstrate to the U.S. Department of Education that your adverse credit history is due to extenuating circumstances. This requires providing documentation to support your claim.
- Student's Eligibility for Additional Aid: If a Parent PLUS loan is ultimately not an option, the student may become eligible for additional unsubsidized federal student loans, which can help cover some of their educational costs.
General Eligibility Criteria for Parent PLUS Loans
Beyond the credit check, other fundamental requirements must be met for Parent PLUS loan approval:
- Relationship: You must be the biological or adoptive parent (or, in some cases, the stepparent) of a dependent undergraduate student.
- Enrollment: The student must be enrolled at least half-time at an eligible school.
- Citizenship: You must be a U.S. citizen or an eligible non-citizen.
- No Default: You cannot be in default on any federal student loans or owe a refund on a federal student aid grant.
- Satisfactory Academic Progress: Your student must maintain satisfactory academic progress as defined by their school.
Key Takeaways on Parent PLUS Loan Approval
The following table summarizes the key aspects of Parent PLUS loan credit requirements:
| Aspect | Parent PLUS Loan Credit Check |
|---|---|
| Good Credit Score? | Not required |
| Adverse Credit History? | Disqualifying (e.g., bankruptcies, loan defaults within 5 years) |
| Approval Focus | Absence of adverse credit, not high score |
In conclusion, getting approved for a Parent PLUS loan is not hard in terms of needing a high credit score, making it accessible to many parents. The primary hurdle is ensuring you do not have a recent history of adverse credit events.
