What is a PLUS loan typically used for?

A PLUS loan, which stands for Parent Loan for Undergraduate Students, is designed specifically to assist parents in financing the education of their dependent undergraduate or graduate students. This loan type is used to cover various education-related expenses, including tuition, room and board, and other costs associated with attending college or university.

Parents can borrow up to the total cost of attendance, minus any other financial aid the student may receive. This makes PLUS loans a critical resource for families who need additional funds beyond what is offered through federal student loans or other financial aid options. The loan terms typically include a fixed interest rate and the responsibility for repayment falls entirely on the parent, distinguishing it from other types of student loans that the student might take on themselves.

The specific focus on education expenses, rather than home purchases, business ventures, or personal debt repayments, underscores the intended purpose of the PLUS loan as a tool for financing higher education.