Deferment of the PLUS loan

[js416256]

<p>Hi, I was wondering what the deferment options were on the PLUS loan. I was checking the PLUS website and they were pretty obscure as to what they entail. Are you able to defer interest and the principle after graduation?</p>

[emeraldkity4]

<p>no
for Plus-
the loans we have had, we didn’t start paying it till 2nd disbursement, which was in Jan.
However, while you may- with an application stating financial need, be able to lower or defer payments until the student leaves school, interest would accrue- just as with any other loan.
It is a low interest loan, but if you can afford to take it out, I think it is in your best interest, to begin paying it back early.
<a href=“http://www.studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp[/url]”>http://www.studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp&lt;/a&gt;&lt;/p&gt;

<p>

Who gets my parents’ loan money?</p>

<p>Either the U.S. Department of Education (for a Direct PLUS Loan) or your parents’ lender (for a FFEL PLUS Loan) will send the loan funds to your school. Your school might require your parents to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan funds remain, your parents will receive the amount as a check or in cash, unless they authorize the amount to be released to you or to be put into your school account. Any remaining loan funds must be used for your education expenses.</p>

<p>What’s the interest rate?</p>

<p>For PLUS Loans disbursed on or after July 1, 2006, the interest rate is fixed (at 7.90 for Direct PLUS Loans and 8.50 percent for FFEL PLUS Loans). For PLUS Loans disbursed between July 1, 1998 and June 30, 2006, the interest rate is variable and is determined on July 1 of every year. For 2007-2008, the variable rate for these PLUS Loans (in both the Direct and FFEL programs) is 8.02 percent. Interest is charged on a PLUS Loan from the date of the first disbursement until the loan is paid in full.</p>

<p>Other than interest, is there a charge to get a PLUS Loan?</p>

<p>Your parents will pay a fee of up to 4 percent of the loan, deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency (the organization that administers the PLUS Loan Program in your state) to help reduce the cost of the loans. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, your parents may be charged collection costs and late fees if they don’t make their loan payments when scheduled.</p>

<p>When do my parents begin repaying the loan?</p>

<p>Generally, the first payment is due within 60 days after the loan is fully disbursed. There is no grace period for these loans. Interest begins to accumulate at the time the first disbursement is made. Your parents must begin repaying both principal and interest while you’re in school.</p>

<p>How do my parents pay back these loans?</p>

<p>They’ll repay a FFEL PLUS Loan to a private lender or loan servicer. They’ll repay their Direct PLUS Loan to the U.S. Department of Education’s Direct Loan Servicing Center. To read more about repayment options under both programs, read the PLUS Loans section in Funding Education Beyond High School: The Guide to Federal Student Aid.</p>

<p>Is it ever possible to postpone repayment of a PLUS Loan?</p>

<p>Yes, under certain circumstances, your parents can receive a deferment on their loans.</p>

<p>If they temporarily can’t meet the repayment schedule, they can also receive forbearance on their loan, as long as it isn’t in default. During forbearance, their payments are postponed or reduced.</p>

<p>Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance apply to both Stafford Loans and PLUS Loans. However, since all PLUS Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance. If they don’t pay the interest as it accrues, it will be capitalized (that is, added to the principal amount of the loan, and additional interest will be based on that higher amount).</p>

<p>Can a PLUS Loan be discharged (canceled)?</p>

<p>Yes, under certain conditions. A discharge (cancellation) releases your parents from all obligation to repay the loan.</p>

<p>Your parents’ PLUS Loan can’t be canceled for these reasons: You didn’t complete your program of study at your school (unless you couldn’t complete the program for a valid reason—because the school closed, for example), you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.</p>

<p>For more information about loan discharge or repayment: If your parents have a Direct PLUS Loan, they should contact the Direct Loan Servicing Center at 1-800-848-0979, or go to <a href=“http://www.dl.ed.gov%5B/url%5D”>www.dl.ed.gov</a>. If they have a FFEL PLUS Loan, they should contact the lender or agency holding the loan.

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