The Dangers of Taking Out a Direct PLUS Loan

While these loans might seem like an easy way for parents to help their child with today's education costs, in far too many cases, they put the parent’s financial security and retirement at risk.

PLUS is an acronym for Parent Loan for Undergraduate Students.

  • PLUS loans are federal loans that parents can take out to cover their child's college costs.
  • The parent, not the student, is responsible for repaying the PLUS loan.
  • PLUS loans do not qualify for all the income-driven repayment plans that student loans do.
  • PLUS loans have large borrowing limits, making it possible to take on too much debt.

Read this article to understand how these loans work, four dangers associated with these loans, what to do before you take a PLUS loan, and what to do if you have one.