Parent PLUS Loan borrowers can choose from four repayment plans offered by the U.S. Department of Education. The best plan for paying off your loans depends on your goals.
Compared to other federal student loans, Parent PLUS loans offer fewer repayment options and benefits. They qualify for fewer income-based repayment plans and loan forgiveness programs. In addition, these loans come with higher interest rates and fees and accrue interest more quickly since it builds up while your child is in school.
For those reasons, many parents borrow private student loans to cover their kids’ college costs. Private lenders offer lower interest rates and fewer fees, depending on your credit score. But they lack flexibility if unexpected financial changes occur, such as job loss or retirement.
Related: What Happens to Parent PLUS Loans When You Retire?
Parent PLUS Loans offer those protections. You can temporarily suspend payments with a deferment or forbearance. If you’re looking for something more long-term, you can switch to a plan that stretches your repayment period over 25 years or ties your monthly payment amount to your family size and discretionary income.
Read on to learn the repayment plans available for Parent PLUS Loans.
Note: If you’d like advice for choosing the best repayment plan for your situation, book a call to work with me. I’ve helped thousands of parents find a way to afford their Parent PLUS Loans so they can retire, buy a house, and sleep better at night.