Consolidate Your PLUS Loans
Grads and Parents Face More Financial Burdens
Federal loans are considered almost a necessity for both students and parents and PLUS loans have become a popular addition to the federal loan programs. In the past student loan consolidation was convenient, low-cost and considered to be the most responsible way to manage multiple student loans with high payments.
Two types of PLUS loans are available to borrowers:Parent PLUS Loan and the PLUS Loan for Graduates and Professionals.
The Parent PLUS Loan gives parents the flexibility to borrow a percentage of their dependent’s tuition, to be used toward tuition. Graduate PLUS Loans are the newer product and give graduate students increased access to funds for advanced degrees. Both loans are available either through the Federal Direct Loan program or via the Federal Family Education Loan (FFEL) program managed by student loan providers. **Both types of PLUS Loans may be consolidated.
Many parents must consolidate in order to stay afloat with other bills and financial responsibilities. Grads often have other financial demands, as well, setting them apart from their undergrad counterparts.
PLUS Consolidation Loans: Part of Federal Consolidation Program
PLUS Loans, whether Parent or Graduate, are part of the federal funding accorded U.S. students. Consolidate your PLUS loans in one of two ways:
- Through a FFELP lender
- Through the Direct Loan Consolidation Program
**TIP: you may simply opt to consolidate your PLUS Loan directly through the lender that currently manages your loan, if consolidation loans are offered.
How the Federal Government Sets Loan Interest Rates
Like other federal loans, the government determines the consolidation loan interest rates. Federal consolidation loan interest rates are fixed. The government calculation takes into consideration the current interest rates on the date of your consolidation application. The “weighted average” of those rates on all your federal loans as of that date is “rounded up to the nearest one eighth of a percent,” with a cap of 8.25.
PLUS Loan Consolidation Programs and Alternatives
Remember, not all lenders offer the federal consolidation loan. But there are now alternative options for debt management.
Consider carefully the repayment plan you choose when you sign your initial loan promissory note. Your lender will offer you a standard, graduated, income-sensitive or an extended repayment plan. The latter has been added as a viable alternative to consolidation.
Where you do discover opportunities to consolidate your PLUS Loan you’re likely to find other conveniences, such as: online applications with an eSign option and interest rate reductions for on-time payments as well as electronic payments.
PLUS Loan Consolidation does not stop here. We’ve offered a general example of an available and competitive PLUS Loan consolidation program. **Best advice: Check first with your own lender. An account manager has immediate and up-to-date information on your loans, payment and credit history and is able to advise you accordingly on responsible debt management.
