How to Cancel a Parent Plus Loan

#1 Student loan lawyer

Updated on August 29, 2023

Parent Plus Loans are federal loans that parents of dependent undergraduate students can use to help cover educational expenses.

These loans are administered by the U.S. Department of Education and are available through schools in the Direct Loan Program.

Parents can borrow up to the total estimated cost of attendance minus any other financial aid. But keep in mind these loans come with a fixed interest rate of 8.05% for loans disbursed between July 1, 2023, and July 1, 2024. They also have higher origination fees than other types of federal student loans.

This guide zeroes in on how to cancel a Parent Plus Loan before the funds are sent out.


The term “cancellation” can be confusing. In this guide, we’re talking about stopping the loan before it gets disbursed to the school. But if you’re curious about loan forgiveness options, you’ll want to explore the question, How can a Parent PLUS Loan be canceled?

What About the Master Promissory Note and Adverse Credit History?

Before diving into cancellation, it’s important to understand some prerequisites for Parent Plus Loans:

Online Master Promissory Note (MPN): Once you’re approved for a Parent Plus Loan, you’re required to complete an Online Master Promissory Note available on the Federal Student Aid website, This is done using your FSA ID and serves as your official agreement to repay the loan.

Credit Check: During the PLUS Loan application process, your credit history will be reviewed. But what if you have adverse credit? Don’t fret. You have options:

  • Get an Endorser: You can still secure a Parent Plus Loan by obtaining an endorser who doesn’t have an adverse credit history. Note: The endorser cannot be the child for whom you’re borrowing.

  • Provide Documentation: If you can document extenuating circumstances to the satisfaction of the S. Department of Education, you may still be approved for the loan.

What Does It Mean to Cancel a Parent Plus Loan?

Canceling a Parent Plus Loan involves taking specific steps to stop the loan before the money is sent out to the school. The process you’ll follow depends on the timing of your decision:

  • Before Disbursement: If the loan hasn’t been sent out yet, you’ll need to complete a Federal Direct Parent PLUS Adjustment Form. You can request it from your child’s school. This form allows you to either reduce or fully cancel the loan. Submit it to the financial aid office long before the disbursement

  • After Disbursement: If you missed the boat and the loan has already been disbursed, you have a 14-day window to submit the Federal Direct Parent PLUS Adjustment Form. This must be done no later than 14 days after you receive the disbursement

  • Beyond the 14-Day Window: But what if you realize you want to cancel the loan more than 14 days after the disbursement notification? In this case, you’ll need to get in touch with your loan servicer

Bonus Tip: If the Parent PLUS loan is canceled, the student may be eligible for additional Unsubsidized Federal Direct loan funds. This request will be processed within the time frame specified by the financial aid office, and the student will receive a confirmation email once it’s complete.

Will You Incur Any Fees for Canceling Before Disbursement?

The straightforward answer is no. You won’t incur any fees specifically for canceling a Parent Plus Loan before the funds are sent out to the school. But there’s more to consider:

  • Origination Fee: Normally, Parent Plus Loans come with an origination fee, currently set at 4.228%. This fee is deducted before the loan is disbursed.

  • Fee Waived for Cancellation: If you decide to cancel the loan before disbursement, this origination fee will not be charged, as the loan won’t be disbursed.

Why Would You Want to Cancel a Parent Plus Loan?

Canceling a Parent Plus Loan before it’s disbursed can be driven by various factors. Understanding these reasons can help you make an informed decision:

  • Change in Educational Plans: Sometimes life happens, and plans change. If the student decides to switch schools or take a gap year, canceling the loan can help adjust the financial aid package to the new situation.

  • Reconsidering Debt: Parents may have second thoughts about taking on additional debt. This could lead them to explore other avenues like scholarships, grants, or work-study programs as alternatives.

  • Better Funding Options: Discovering a more favorable loan or receiving a generous scholarship can make canceling a Parent Plus Loan a smart move to avoid unnecessary debt.

  • Financial Hardship: Life events like job loss or sudden expenses can upend your financial landscape. Canceling the loan in such cases can lighten the financial load on the Parent PLUS Loan borrower.

  • Personal Reasons: Family dynamics, prioritizing other financial goals, or other personal considerations can also be valid reasons for canceling the loan.

Regardless of your reason, it’s crucial to talk to the financial aid office and follow the correct steps to ensure the loan is canceled before disbursement. Doing so helps you sidestep complications and potential penalties.

What Happens After You Cancel?

Successfully canceling a Parent Plus Loan is just the first step. There are a few things you’ll need to keep an eye on afterward:

  • Confirmation: You should receive a confirmation from either the financial aid office or your loan servicer verifying that the loan cancellation has been processed.

  • Adjustments to Financial Aid: If the loan cancellation makes the student eligible for additional unsubsidized loans, they can apply for these. The financial aid office will then review and process the request, sending a confirmation email to the student’s account.

  • Outstanding Balance: If canceling the loan leaves an outstanding balance on the student’s account, that balance will need to be paid in full by the due date using personal funds.

  • Monitor Communications: It’s crucial to keep an eye on any communications from the financial aid office or your loan servicer. This ensures that the cancellation has been processed correctly and allows you to address any potential issues that may arise.

Bottom Line

Understanding how to cancel a Parent Plus Loan before disbursement can save you stress and money. This guide provides the key steps and considerations to help you navigate the process with ease.

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