Background

Parent PLUS loans are federal loans made to parents of dependent undergraduate students to help cover the student’s cost of attendance minus other aid. If a parent has an adverse credit history, the Department of Education allows an endorser (often called a co-signer) to assume responsibility for repayment if the borrower defaults. (U.S. Department of Education – studentaid.gov)

In my 15 years as a financial educator, I’ve seen endorsers surprised by the legal and credit consequences when a Parent PLUS loan goes unpaid. Treat endorsing like signing any other loan — it carries real, long-term risk.

How co-signer (endorser) liability works

  • Primary borrower: the parent who applied for the Parent PLUS loan and is primarily responsible for payments.
  • Endorser (co-signer): a person who agrees to repay if the parent cannot — the endorser becomes legally liable and the lender can pursue them for missed payments.

Key details:

  • An endorser is allowed only when the parent has an adverse credit history and the parent cannot otherwise obtain the loan. (studentaid.gov)
  • The endorser’s credit report may be affected by late payments, delinquencies, or default, just like the borrower’s. (Consumer Financial Protection Bureau – consumerfinance.gov)
  • Unlike private loans where co-signers are common at origination, federal Parent PLUS loans do not routinely use co-signers unless the endorser process is triggered by an adverse credit finding.

Real-world example (brief)

A client’s parent endorsed a PLUS loan to help get an education started. When the borrower lost income and missed payments, the lender contacted the endorser and reported late payments to credit bureaus. The endorser’s credit score dropped, making it harder to refinance a mortgage.

Who is affected / eligibility

  • Parents of dependent undergraduate students who apply for Parent PLUS loans.
  • Any person who agrees to be an endorser because the parent had an adverse credit history.
    Note: Students do not sign Parent PLUS loans; the parent is the borrower. If an endorser signs, they accept legal liability for repayment.

Practical tips to protect yourself before endorsing

  1. Check the parent’s repayment plan and budget realistically for the life of the loan. Consider Income-Contingent Repayment eligibility only applies if Parent PLUS loans are consolidated into a Direct Consolidation Loan (it changes terms). (studentaid.gov)
  2. Get the loan terms in writing and confirm whether the endorser has the right to request documentation or communication about the loan.
  3. Consider alternatives first: scholarships, grants, student federal loans in the student’s name, or a private loan with transparent co-signer release terms. See our guide on Parent PLUS Repayment Options: A Practical Guide for Borrowing Parents.
  4. If you already endorsed and want to remove liability, one option is refinancing the loan into a private loan without you on the note — but refinancing the Parent PLUS loan into a private product will remove federal protections and forgiveness options. See Refinancing Parent PLUS Loans: Options and Considerations.

Common mistakes and misconceptions

  • Mistake: thinking an endorser is only responsible if explicitly named as a co-borrower. Reality: an endorser is legally responsible once they sign the endorser agreement.
  • Mistake: believing endorsers can usually be released later. Reality: endorser release options are limited; removal typically requires refinancing or full repayment.

Frequently asked questions

Q: Can an endorser be removed from a Parent PLUS loan?
A: Generally no — removal usually requires refinancing or paying off the loan. Consolidation into a Direct Consolidation Loan does not free an endorser from prior liability unless the endorser is not included on the consolidation. Check options carefully. (studentaid.gov)

Q: What happens if the parent defaults?
A: Lenders (or the Department of Education, for federal loans) can pursue the endorser for repayment, and late payments or default are reported to credit bureaus, damaging credit scores. (consumerfinance.gov)

Q: Are endorsers protected by the same federal borrower protections?
A: An endorser’s legal status differs from the primary borrower’s — endorsers may not be eligible for certain borrower protections unless the loan is in the borrower’s name or consolidated under specific programs. Always confirm details with the loan holder and the Department of Education. (studentaid.gov)

Related resources on FinHelp

Authoritative sources

Professional disclaimer: This article is educational and not individualized financial advice. Consult a financial advisor or the loan servicer to discuss your specific situation before endorsing or refinancing any loan.