There is no grace period for a PLUS loan. Interest begins to accumulate at the time the first disbursement is made. You must begin repaying both principal and interest while the student is in school. The first payment is usually due within 60 days after the loan is fully disbursed.
Both the Direct PLUS Loan and FFEL PLUS loan programs offer four repayment plans you can choose from, but the terms differ slightly. For Direct PLUS Loans, your parents can choose the Standard, Extended, or Graduated Repayment Plan but not the Income Contingent Repayment Plan. For FFEL PLUS Loans, parents can usually choose the Standard, Extended, Graduated, or Income Sensitive Plan
- Standard Repayment Plan requires you to pay a fixed amount each month—at least $50—for up to 10 years. The length of repayment period will depend on the loan amount.
- Extended Repayment Plan allows repayment over a period that is generally 12 to 30 years, depending on the loan amount. The monthly payment may be lower than made by repaying the same total loan amount under the Standard Repayment Plan, but a higher total amount of interest will be repaid over the life of the loan because the repayment period is longer. The minimum monthly payment is $50.
- Graduated Repayment Plan, Payments are lower in the beginning then increase, usually every two years. The repayment period will range from 12 to 30 years, depending on the loan amount. Initial monthly payments will be equal to either the interest that accumulates on the loan between payments or half the payment that would otherwise be made using the Standard Repayment Plan, whichever is greater. However, monthly payments will never increase to more than 1.5 times the Standard Repayment amount. A higher total amount of interest will be repaid because the repayment period is longer than under the Standard Repayment Plan.
- Income Contingent Repayment Plan bases the monthly payment on your family’s yearly income, family size, interest rate, and loan amount. As income rises or falls, so do payments. After 25 years, any remaining balance on the loan will be forgiven, but you pay taxes on the amount forgiven.
You will be placed in the Standard Repayment Plan unless you make a different choice. You can change plans throughout the life of your loan, as long as the maximum repayment period under your new plan is longer than the length of time your loans have already been in repayment. Under the FFEL Program, you can change plans once a year. Under the Direct Loan Program, you can change plans any time.
If you believe that you will not be able to begin repaying the loan during the time that the student is in college, you may apply for a forbearance which may grant the option of paying interest only or making no payments for the four years of college.
|
Repaying your Loan
