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Interest Rates for PLUS Loans |
One if the best aspects of the PLUS loan are that the loan interest rate is regulated by the federal government. Though variable (adjusted annually on July 1), the interest rate does not exceed 9 percent. For the 2005-2006 educational year, the interest rate for loans made on or after July 1, 1998 was 6.1 percent.
Your family will be notified of interest rate changes throughout the life of the loan. Interest is charged on the loan from the date of the first disbursement until the loan is paid. However, a portion of the interest may be tax deductible. In general, interest on student loans is tax deductible up to a maximum of $2,500 annually. IRS Publication 970, Tax Benefits for Higher Education, explains these credits and other tax benefits.
If your family has PLUS loans that were first disbursed before July 1, 1998, the interest rate might be different. For interest rates on a FFEL PLUS Loan, you should check with your lender. For interest rates on a Direct PLUS Loan, you should check with the Direct Loan Servicing Center
You will also 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 your state guaranty agency to help reduce the cost of the loans. Some lenders and guarantors waive the fee so be sure to ask. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, if you don’t make loan payments when scheduled, you may be charged collection costs and late fees.
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Interest Rates for PLUS Loans
