How Much of the Parent PLUS Loan Should I Borrow?

Download the Parent PLUS Loan Worksheet referenced in the video.

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How to Figure Out How Much You Should Borrow

The purpose of this tutorial is to help you determine how much of Parent PLUS Loan you may want to borrow.

First, Figure Out Your Maximum Loan Eligibility

The first step is determining how much you are eligible to borrow by comparing your student's estimated costs with their estimated aid to determine your maximum loan eligibility.

One important thing to remember is that you may not need to borrow the entire amount that you are eligible for. This amount simply represents the maximum that you may borrow.

To view your student's cost and aid estimates, log in to eLion and look at the Student Aid Summary.

If you don't already have access to the Student Aid Summary, your student will need to grant you access. First-year students will be able to do so only after establishing their Penn State Access Account at FTCAP, or at a Signature Station.

When you review the Student Aid Summary, note the totals per semester and for the year.

We recommend figuring out your Maximum Loan Eligibility for the year and applying for that amount. This is important to note because when completing the PLUS Request Form on eLion, you will need to enter the Amount to Borrow and choose the corresponding Loan Term, also referred to as the Loan Period. If you choose the Fall/Spring Loan Term, you will receive the loan in two equal disbursements. The first disbursement will be credited on the fall tuition bill and the second disbursement will be credited on the spring tuition bill.

You may want to download the Parent PLUS Worksheet for this next part.

1. Enter your Total Estimated Costs on the worksheet, including the billable and non-billable costs listed on the Student Aid Summary
2. Next, fill in the Estimated Aid Amount using the aid listed on the Student Aid Summary
3. Finally, subtract the difference between the two totals to get your Maximum Loan Eligibility.

Now that you have your Maximum Loan Eligibility, you can figure out how much you actually want to borrow.

You may not borrow more than your Maximum Loan Eligibility; however, you may borrow less. An example of when you may want to borrow less is if you plan to contribute previously saved educational funds.

Then, Figure Out the Net Loan Amount

When applying for a Parent PLUS Loan, plan for the loan fees.

Let's pretend $10,000 is how much you want borrow. For the full $10,000 to be credited to your student's Bursar account, you'll need to figure in the 4 percent Loan Origination Fee because it is deducted before the loan is disbursed. The easiest way to figure out the net loan amount to borrow is to divide your loan amount by .96.

Continuing with our example, divide $10,000 by .96. What you'll get is $10,416. This is the amount that you would enter on the PLUS Request Form to make sure the amount you intended, $10,000, is credited to your student's bursar account.

Now, do this with the real amount you want to borrow. Replace the $10,000 with your amount and divide it by .96. Enter that number on the PLUS Request Form.