How Much Does the Parent Plus Loan Cover?
The Parent Plus Loan is a federal student loan program designed to help parents finance the educational expenses of their dependent children. As a parent considering this loan option, it’s crucial to understand how much the Parent Plus Loan can cover. This knowledge will help you make informed decisions about your financial aid strategy and ensure that your child’s education is adequately funded.
The Parent Plus Loan is a credit-based loan, which means that the parent borrower must meet certain credit requirements to qualify. The loan amount can vary depending on the cost of attendance at the student’s educational institution, as well as other financial aid received by the student. Here’s a breakdown of how much the Parent Plus Loan can cover:
1. Cost of Attendance: The Parent Plus Loan can cover the full cost of attendance at the student’s institution, which includes tuition, fees, room and board, books, and other necessary expenses. However, it’s important to note that the loan cannot exceed the cost of attendance as determined by the school.
2. Unmet Financial Need: If the cost of attendance exceeds the financial aid package offered to the student, the Parent Plus Loan can help bridge the gap. This is known as the unmet financial need, and the loan can cover this amount up to the loan limit.
3. Loan Limits: The Parent Plus Loan has specific annual and aggregate limits. For the 2021-2022 academic year, the annual loan limit is the cost of attendance minus any other financial aid received, up to $40,000 per year for dependent undergraduate students. For dependent graduate students, the annual loan limit is the cost of attendance minus any other financial aid received, up to $60,000 per year.
4. Aggregate Limits: The aggregate loan limit for Parent Plus Loans is the total amount a parent can borrow for all dependent undergraduate children. For dependent undergraduate students, the aggregate loan limit is $100,000 for parents with a dependent child who is a graduate or professional student, and $135,000 for parents with a dependent child who is an undergraduate student.
Understanding how much the Parent Plus Loan can cover is essential for parents to ensure that their child’s educational expenses are met. However, it’s important to consider the long-term financial implications of taking out a Parent Plus Loan, as it must be repaid with interest. As such, it’s advisable to explore other financial aid options, such as scholarships, grants, and work-study programs, before relying solely on the Parent Plus Loan.
