Can I Take Out Parent PLUS Loans While Repaying My Own Student Loans?

Can I Take Out Parent PLUS Loans for My Child's Education?

There are no rules preventing someone with their own student loans from taking out parent loans. To qualify for parent PLUS loans, you must meet the eligibility for federal financial aid. This includes:

• Showing financial need
• Being a U.S. citizen or eligible noncitizen
• Having a Social Security number
• Certifying that you are not in default on a federal student loan, do not owe money on a federal student grant and will not use borrowed funds for things outside education expenses

The student you are borrowing on behalf of must be enrolled or accepted as a regular student in an eligible program. They must be enrolled at least half-time if taking direct loan program money. Also, the student must be qualified for higher education and keep up satisfactory progress while in school.

When applying for parent PLUS loans, you must also be a biological or adoptive parent of the child for whom you're seeking funding and you cannot have an adverse credit history.

For parents still paying off their own loans, this final point may be difficult to navigate. The status of your own student loan debt may influence your ability to get approved for parent PLUS loans.

Parent PLUS Loans and Credit History

Unlike some other borrowing situations, applying for PLUS loans does not consider debt-to-income ratios, credit scores or employment status. The most essential factor is not having an adverse credit history.

Federal Student Aid defines an adverse credit history on a requested credit report as:

• In the two years before the credit report date, you have had one or more debts totaling over $2,085 that are at least 90 days delinquent, placed in collections or charged off.
• In the five years before the date of the credit report you have a:
  • Default determination
  • Bankruptcy to discharge debts
  • Repossession
  • Foreclosure
  • Tax lien
  • Wage garnishment
  • Write-off of federal student aid debt

Even if you're new to credit or working on rebuilding your credit, you may qualify for parent PLUS loans as long as you have not experienced any events listed above that lead to an adverse credit history.

Other Ways to Help Your Child Pay for College

Even if you don't take out parent loans for your child, there are other ways to help pay for college. Consider assisting your child with the cost of college by doing the following:

• Let them live at home and commute while you continue to support them in terms of utilities, cellphone, food and other needs as much as possible.
• Encourage them to attend community college for the first two years.
• Help them apply for scholarships.
• If academically appropriate, encourage your child to earn Advanced Placement credits during high school.
• Consider the military, AmeriCorps or other service-oriented options that can help pay for college.
• Assist in a job search so they can find work to help pay for some classes.

Be upfront with your kids about your finances and what you can afford for college as a family throughout the process. While it may be hard to disappoint them, this is one of the most important budgeting lessons you can share. Helping them learn to live within their means early in adulthood will pay off in the future.

The Bottom Line

To assess where you're at with your own student loans, start by checking your credit report. You can also monitor your credit and get a FICO^® Score^☉ for free from Experian. Monitoring comes with updated reports every 30 days, notifications for spending and credit utilization increases, real-time suspicious credit activity and more.

Think carefully about whether or not it's a good idea to take out more loans. If you've been paying off your own student loans for a long time, it's OK if you are reluctant to take on more even for your child. When you get a full picture of your student debt on your credit report, you'll be more prepared to consider applying for parent PLUS loans or making the decision to contribute to your child's education in a different way.