How to Create a Student Budget for the Parent PLUS and Private Alternative Loans
Need to borrow a loan to cover your remaining costs? Check out our resources on how to create a budget and determine how much of a loan to borrow.
Please note that the origination fee for PLUS loans changed to 4.228 percent on Oct 1, 2020. Use 0.95772 for your calculations.
Need additional help to figure out how much to borrow? Use our Interactive Loan Worksheet.
This video explains how to create a student loan budget for the Parent PLUS Loan for parents of dependent students. In this video, we will assist parents who are planning to borrow a PLUS Loan by taking into account the aid the student already has, any funds expected to be paid out of pocket, and the loan origination fee.
In order to help you with these calculations, please download the Parent PLUS Loan Worksheet. Next, please log onto LionPATH to view your current Award Summary. Document the aid total for the entire year if you plan to take out a loan to cover both the fall and spring. We recommend applying for fall/spring loans if possible to reduce the number of credit checks and ensure the entire bill for the year is covered.
If you only want a PLUS Loan for one semester, document only the fall or only the spring. Please note, if you apply for a PLUS Loan for the entire year, the amount you request will be evenly split between the fall and spring semesters.
First, you must calculate your billable loan amount. If you simply wish to borrow the maximum the student is eligible for, you may click the corresponding box in the PLUS Request form on studentaid.gov. The maximum amount you can apply for, and the tuition and fees rate will not be finalized until late July. Otherwise, you will subtract your Total Aid from your Billable Costs to find this amount. You can enter this information in Part 1 of the worksheet.
Now we will move on to Part 2 of the worksheet. Enter your Billable Loan Amount from Part 1 in the appropriate box. Next, enter the total amount of personal contributions you plan to use toward your student’s education. If you don’t plan to use any personal funds, just enter “zero” in the Total Out-of-Pocket Contributions box. Subtract your Total Out-of-Pocket Contributions from your Billable Loan Amount, and you will have the Amount Needed to Borrow.
Finally, you need to account for the Loan Origination Fee when finalizing the amount you need to borrow. In Part 3 of the worksheet, enter the amount you calculated in Part 2 in the Amount Needed to Borrow box. The loan origination fee is 4.236%, so to determine the gross amount of the loan to request, you will divide the Amount Needed to Borrow by .95764. Enter the results in the Amount to Request box. This is the amount you will want to enter on your PLUS Loan request form on studentaid.gov.