Even worse, Parent PLUS loans have the highest interest rates among all federal student loans. Plus, that’s expected to rise again on July 1, 2015, when rates will be set for the upcoming school year. Pros: Lowers monthly payments and offers Parent PLUS loan forgiveness after 25 years. Requires paying a higher percentage of income than other repayment plans.On the plus side, I’m happy to report that many Parent PLUS loan repayment options available to students with loans are also available to parents. Currently, the Income-Based Repayment and Pay As You Earn plans aren’t available for Parent PLUS loans.PLUS loans (Parent Loans for Undergraduate Students) can be consolidated just like Stafford and Perkins Loans.However, parents cannot consolidate their children’s Stafford Loans and students cannot consolidate their parent’s PLUS loans into a single consolidation loan because the borrowers are different.Parents can take out a new loan for each school term and reconsolidate each year, locking in those rates when the rates are favorable.Consolidating PLUS loans also can provide access to different repayment terms, such as extended, graduated, income contingent, and income-based repayment.
But these payments may still be less than those of other options.If the student agrees to make payments on the PLUS loan, but fails to make on-time payments, the parents will be held financially responsible!Most news about student loans focuses on struggling college graduates who can’t repay their loans. We hardly ever hear about parents who are stuck repaying Parent PLUS Loans for their children who obtained an undergraduate degree. In fact, Parent PLUS loan debt currently stands at about billion.Your consolidated loan’s interest rate will be equal to the average of all the student loans you want to consolidate, which is then rounded up to the nearest 1/8 percent.
For applications received prior to July 1, 2013, there might have been an interest rate savings if you consolidated your PLUS Loans.
Parent PLUS loans are eligible for Income-Contingent Repayment if they have been included in a Federal Direct Consolidation loan.