What is the primary distinction of Direct PLUS Loans?

Direct PLUS Loans are primarily distinguished by the requirement of a credit check and their availability to graduate students as well as parents of dependent undergraduate students. This specific feature sets them apart from other federal student loans, such as Direct Subsidized and Unsubsidized Loans, which do not require a credit check and are solely available to undergraduate students.

The credit check for Direct PLUS Loans evaluates the borrower's credit history to ensure they do not have an adverse credit history, which is defined as having a current delinquency of 90 days or more, a charge-off, a bankruptcy discharge, or other significant negative credit events. This requirement reflects the loans' higher risk profile compared to other federally subsidized options, making it critical that borrowers have a suitable credit status.

Moreover, since Direct PLUS Loans can be taken out by graduate students and parents of dependent undergraduates, they provide an avenue for funding higher education that is not available through other types of federal loans targeted solely at undergraduate students. This flexibility further emphasizes how Direct PLUS Loans cater to a broader audience beyond just the undergraduate demographic.