Direct PLUS Loan Credit Counseling: What You Need to Know

Direct PLUS Loan Credit Counseling: What You Need to Know

If you have bad credit, you can still secure a direct PLUS loan from the federal government — but you might have to complete 20 to 30 minutes of free PLUS credit counseling.

The counseling is especially important because direct PLUS loans come with the highest interest rate among federal loan options. That hinders repayment for parent PLUS loan borrowers or graduate students taking out PLUS loans.

But counseling could help ease your repayment. Here are four topics to cover:

Why you might need PLUS credit counseling
How to complete PLUS credit counseling
What’s covered in PLUS credit counseling
Why loan counseling is worth your time

Why you might need PLUS credit counseling

If you’ve already applied for a PLUS loan, then you might be familiar with the U.S. Department of Education’s Office of Federal Student Aid website. It allows you to complete entrance counseling, plus other mandatory and optional training upon taking out your loans. This is different from hiring a student loan counselor (for a fee, in most cases) after you or your child has left school.

In the case of PLUS credit counseling, you might be completing it while you wait for your loan application to be approved. More likely, you’ll complete it after having your application denied.

This is because the Education Department only requires that applicants — either postgraduate students or the parents of undergraduate students — complete the counseling if they have an adverse credit history. That’s defined as being at least 90 days’ delinquent on a debt of $2,085 or more.

It’s also defined as having any of the following marks on your credit report (within the past five years):

  • Default determination
  • Discharge of debt in bankruptcy
  • Foreclosure
  • Repossession
  • Tax lien
  • Wage garnishment
  • Write-off of a federal student aid debt

If your PLUS loan application is denied, you would need to either obtain an endorser (or cosigner) or document the unique circumstances of your credit history. Then comes the requirement to take student loan counseling online.

How to complete PLUS credit counseling

You can voluntarily complete PLUS credit counseling at, but you have to finish it within 30 days to fulfill the borrowing requirement.

There are free demos of the all-virtual counseling, but you’ll need an FSA ID (formerly the Federal Student Aid pin) to complete it. If you’re a parent, you’ll need to create your own FSA ID, not use your child’s. You can create one in five minutes or less but might need to wait 24 hours to have your credentials approved.

Also, have the following personal financial information handy:

  • Adjusted gross income
  • Financial aid
  • Living expenses

You will also need to fill out specifics about your living expenses, like:

  • Rent/housing
  • Utilities
  • Groceries
  • Insurance
  • Credit card payments

You’ll have the option of adding more expenses as you see fit. Rough estimates are all that’s required to progress through the loan counseling. But the more data points you can enter into the tool, the better information it will pump out.

Entering your loan, income and expenses information can inform you about your future as a borrower. The advice is one-size-fits-all, but the numbers are yours.

A parent PLUS loan borrower earning $50,000 in adjusted gross income per year while keeping expenses low, in this example, could be presented with this helpful visual:


What’s covered in PLUS credit counseling

The Education Department’s PLUS credit counseling course features two sections.

1. Student loans and affordability

This first section allows you to assess your prospective loan repayment.

Besides taking your loan details, income and expenses to estimate your monthly budget for repayment, you can also plug your information into the Federal Student Aid website’s income-driven repayment plan simulator to see which repayment plan is best for you (and whether you might be eligible for loan forgiveness).

For an even more holistic view of their situation, parent PLUS loan borrowers will be able to include their other federal loans, and postgraduate students will be able to do the same.

2. Avoid delinquency and default

The second section of the loan counseling process focuses on avoiding the undesired scenarios of delinquency and default. You’ll want to pay extra-close attention to the second half of the counseling if your student loan burden could be burdensome, or has already proved to be.

This section covers everything that might keep you from joining the 11.1% of borrowers delinquent on their payments or in default, according to our student loan statistics. These topics include:

  • Deferment and forbearance: How to pause your repayment if you need to
  • Loan forgiveness, cancellation or discharge: Scenarios where you might qualify for relief
  • Resolving disputes: Direction on troubleshooting the borrower-servicer relationship
  • Loan consolidation: Considering the pros and cons of grouping your federal loans

It’s less interactive than the first half of the counseling — you won’t need to input personal information — but just as important to comb through. So be sure to take your time through it even though the website says you might finish everything within 30 minutes.

Why loan counseling is worth your time

If the Department of Education requires you to complete student loan counseling and you don’t get around to it, you won’t be able to qualify for parent PLUS loans or grad PLUS loans. That’s the obvious reason to finish it as soon as you’re asked.

Beyond that, the counseling acts as a quick and easy form of continuing education on student loan debt. It’s divided into two main sections — I completed each in about 15 to 20 minutes. You might be faster if you have all of your information handy.

All in all, student loan counseling is what you make of it. The more information you put into the student aid website’s tools, the better results you may receive. And the more time you spend learning about your loans, the more prepared you’ll be to repay them.

So although you might be required to do PLUS credit counseling, it can also be worthwhile.

Interested in refinancing your Parent PLUS loans?

Here are the top 5 lenders of 2020!

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.