A Direct PLUS loan is usually taken out by the parent to pay for his/her child’s college education. The child must still complete the FAFSA (Free Application for Federal Student Aid), but it is the parent who is ultimately responsible for the loan. The interest rate on Direct PLUS loans depends on the date of disbursement and is set by the Department of Education. Some parents assume the loan can be transferred to the child once the student graduates, but unfortunately, as a parent borrower of a Direct PLUS loan, the loan cannot be transferred to the child; the parent is responsible for repaying the loan.