PLUS Loan

PLUS Loan
Name	PLUS Loan
Type	Federal student loan
Country	United States
Introduced	1965
Administered by	U.S. Department of Education
Status	Active

PLUS Loan A federal credit-based loan program for parent and graduate borrowers originating from U.S. higher-education policy, the PLUS Loan has been central to debates involving Higher Education Act of 1965, U.S. Department of Education, Congress of the United States, Office of Federal Student Aid, and institutional aid offices. It functions alongside programs like Federal Perkins Loan Program, William D. Ford Federal Direct Loan Program, Pell Grant, Federal Family Education Loan Program, and private lenders used by students at institutions such as Harvard University, University of California, Berkeley, Ohio State University, and Community colleges. Policymakers in bodies including the Senate Committee on Health, Education, Labor, and Pensions and the House Committee on Education and the Workforce frequently reference it when discussing affordability, access, and debt relief.

Overview

The PLUS Loan is a federally backed credit-based loan administered under statutes such as the Higher Education Act of 1965 and overseen by the U.S. Department of Education and the Office of Federal Student Aid. It supplies funds to borrowers associated with eligible institutions like Columbia University or City University of New York campuses and supplements awards from programs like the Pell Grant or institutional scholarships at places such as Stanford University and Massachusetts Institute of Technology. Legislative and regulatory settings shaped by actors including the United States Congress, the Government Accountability Office, and administrations such as the Clinton administration, George W. Bush administration, and Obama administration have influenced origination, credit criteria, and servicing frameworks involving servicers formerly or currently contracted by the Department.

Types and Eligibility

PLUS Loans fall into categories that serve distinct borrower populations: Parent PLUS for parents of dependent undergraduates, and Graduate PLUS for borrowers enrolled in graduate or professional programs at institutions like Yale Law School, Johns Hopkins University School of Medicine, and Georgetown University. Eligibility depends on factors codified in legislation enacted by the United States Congress and implemented by the U.S. Department of Education, including institutional certification from eligible schools such as University of Michigan or University of Texas at Austin. Creditworthiness standards have been informed by analyses from the Consumer Financial Protection Bureau, the Federal Reserve Board, and reports by the Government Accountability Office, while administrative guidance has been issued in rulemaking during administrations like the Trump administration and Biden administration.

Application and Disbursement

Applicants complete processes administered through the Free Application for Federal Student Aid portal and institutional financial aid offices at colleges like Brown University or University of Florida. Disbursement procedures require institutional certification and coordination among campus bursars, loan servicers, and the U.S. Department of Education, similar to processes used for Stafford Loan and Direct Subsidized Loan disbursements. Borrowers interact with servicers that have included contractors linked to federal procurement reviews by the Department of Education Office of Inspector General and oversight by congressional panels such as the Senate Committee on Health, Education, Labor, and Pensions.

Interest Rates and Fees

Rates are set in statute and modified periodically through rules influenced by congressional action in bills authorizing the Higher Education Act of 1965 and budgetary measures debated in the United States Congress. Historically, comparisons are made with rate structures for Direct Subsidized Loans, Direct Unsubsidized Loans, and private loans offered by banks like Bank of America or Wells Fargo. Fee practices, including origination and guaranty fee arrangements, have been examined by agencies such as the Government Accountability Office and litigated in contexts involving the Supreme Court of the United States, while regulatory changes have been promulgated by the U.S. Department of Education under different presidential administrations.

Repayment Options and Forgiveness

Repayment plans applicable to PLUS borrowers intersect with federal programs like the Income-Driven Repayment plans, Public Service Loan Forgiveness administered with oversight involving agencies such as the Internal Revenue Service for tax treatment questions, and statutory forgiveness pathways modified by acts of the United States Congress. Parent borrowers and graduate borrowers consider options similar to those described for Direct Loans at institutions including New York University and University of Chicago, and eligibility for forgiveness or consolidation has been shaped through guidance from the U.S. Department of Education and legal challenges adjudicated in federal courts such as the United States Court of Appeals for the Second Circuit.

Impact and Criticism

Scholars, advocacy organizations, and legislators—from Brookings Institution analysts to groups like National Education Association and Student Debt Crisis Center—have critiqued the PLUS Loan's role in student indebtedness, comparing aggregate balances with datasets produced by the Federal Reserve Bank of New York and the Consumer Financial Protection Bureau. Critics cite borrower outcomes studied at universities including Michigan State University and policy analyses from think tanks like Urban Institute and American Enterprise Institute, while proponents reference access improvements for students at institutions such as Florida State University and University of Washington. Debates have played out in hearings convened by the Senate Committee on Health, Education, Labor, and Pensions and in media coverage by outlets that report on higher-education finance.

Category:Student loans in the United States