Janice Lozano
Parent PLUS loans are a great way to help dependent undergraduate students pay for college or trade school. They are federal loans that supplement other financial aid offered to students. However, they are costlier and offer less flexibility than federal loans made directly to students. Repayment on these loans typically begins 60 days after the final disbursement for the academic year. However, parents can opt for in-school deferment, postponing repayment until their child graduates or drops below half-time enrollment, followed by a six-month grace period. While deferment provides temporary relief, interest accrues during this period, increasing the overall repayment amount. To manage their loan effectively, parents should understand their loan status and explore options like the Income-Contingent Repayment (ICR) plan.
| Characteristics | Values |
|---|---|
| When does repayment begin? | 60 days after disbursement for that academic year |
| Can I defer repayment? | Yes, while the student is enrolled at least half-time at an eligible school |
| How long does deferment last? | Six months after the student leaves school or drops below half-time enrollment |
| What happens during deferment? | Interest accrues and is added to the balance when repayment begins |
| What is the minimum payment? | $5 |
| Can I consolidate Parent PLUS loans with other federal student loans? | No |
| Can I transfer repayment responsibility to the student? | No |
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What You'll Learn
Deferment options
In-School Deferment: When applying for a Parent PLUS loan, borrowers can choose in-school deferment, which postpones repayment until the student graduates or drops below half-time enrolment. This is the most common option and is automatically selected unless changed. During this period, interest still accrues, and it is advisable to make interest payments to minimise the total loan cost.
Grace Period: After the student graduates or drops below half-time enrolment, there is a six-month grace period before repayment begins. This provides a brief window to prepare for loan repayment.
Income-Contingent Repayment (ICR) Plan: Parent PLUS loans can be consolidated to become eligible for the ICR plan, which sets a minimum payment of $5 and bases repayments on income. This can provide lower monthly payments if income is modest. However, consolidating federal student loans with Parent PLUS loans is not advisable, as it will result in the loss of repayment plan options and forgiveness programs for the federal loans.
Rehabilitation: If a loan defaults, rehabilitation allows borrowers to bring it back to good standing by making nine months of reasonable payments based on their income. This removes the default note from the credit report, but the default remains in the credit history.
It is important to note that Parent PLUS loans accrue interest during deferment periods, and this interest is capitalised and added to the principal amount at the end of the deferment. As such, it is beneficial to make interest payments during any deferment period to minimise the overall cost of the loan.
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Repayment strategies
Parent PLUS loans offer fewer options and protections than other federal student loans, but there are still strategies you can use to manage your loan repayments.
Firstly, it is important to understand the status of your loan. Parents can log in to their FSA Dashboard to view their loan details, including the loan's status (deferment, repayment, forbearance, etc.) and servicer information. Once you know the servicer, you can set up an account on their website to manage the loan, including making payments and changing the loan's status.
If you want to defer payments until after your student graduates, you must contact the servicer. Otherwise, repayment typically begins 60 days after disbursement. Parent PLUS loans accrue interest during deferment periods, so it is advisable to make payments toward the interest during this time if possible. This will help to reduce the overall cost of the loan.
One option to consider is consolidating your Parent PLUS loan, which will make you eligible for the Income-Contingent Repayment (ICR) plan. The ICR plan requires a minimum payment of just $5, and you can use the Education Department's Loan Simulator to estimate your payments. However, it is important to note that consolidating federal student loans with Parent PLUS loans is not advisable, as it will result in the loss of certain repayment plan options and forgiveness programs.
Another strategy is loan rehabilitation, which can help remove the default note from your credit report after 9 months of reasonable payments based on your income. However, a defaulted loan can only be rehabilitated once, and the default will remain on your credit history.
By understanding the available options and seeking guidance from your loan servicer, you can develop a repayment strategy that best suits your circumstances.
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Interest accumulation
Parent PLUS loans accrue interest while the student is in school, even during deferment periods. This interest accumulation can cause the loan to grow significantly over time. While some loans offer a grace period before repayment begins, interest will continue to accrue during this time, increasing the overall cost of the loan.
When applying for a Parent PLUS loan, borrowers are given the option to defer repayment until after the student graduates. While this may provide temporary financial relief, it is important to understand that interest will continue to accrue, and the loan balance will increase. To minimize the overall cost of the loan, it is advisable to make interest payments while the student is still in school, if possible.
The interest rate for Parent PLUS loans is typically higher than that of direct student loans, and it is fixed for the life of the loan. This means that the interest rate will not change, and interest will continue to accumulate at the same rate throughout the loan term. As of July 2025, the interest rate for Parent PLUS loans is 8.94%.
It is worth noting that Parent PLUS loans offer fewer repayment options and protections than other federal student loans. They do not qualify for all income-driven repayment plans and loan forgiveness programs. Therefore, it is essential for borrowers to carefully consider their repayment strategy and seek alternative solutions if the payment amounts become unmanageable.
To make informed decisions regarding Parent PLUS loans, it is recommended to regularly check the loan status and details on the FSA Dashboard or the loan servicer's website. This allows borrowers to stay updated on the loan's interest accumulation, repayment status, and any available options for managing the loan.
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Loan consolidation
Repayment on Parent PLUS loans typically begins 60 days after disbursement. However, if you apply for in-school deferment, repayment can be postponed until after your child graduates, as long as they are enrolled at least half-time. This deferment period can be extended by six months after they drop below half-time enrollment. It is important to note that interest will accrue during these deferment periods, which can cause the loan amount to increase significantly.
It is important to note that Parent PLUS loans should not be consolidated with other federal student loans. Doing so will result in the loss of certain repayment plan options and forgiveness programs for the non-Parent PLUS debt. If you have multiple Parent PLUS loans, each loan must be consolidated individually before consolidating them all together. This process involves filling out consolidation applications online or on paper, providing necessary loan information, and choosing a servicer.
Consolidation can be a faster way to resolve loan defaults compared to rehabilitation, which requires nine months of reasonable payments. However, the default will remain on your credit history. Therefore, it is essential to carefully consider your options and choose a strategy that best suits your financial situation.
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Loan forgiveness
Parent PLUS loans have fewer protections and options for forgiveness than other federal student loans. However, borrowers of this loan type can still pursue forgiveness through several means.
One option is Income-Driven Repayment (IDR). IDR plans adjust monthly payments according to income and family size, providing relief to borrowers facing financial hardship. Parent PLUS loans only qualify for one IDR plan: the Income-Contingent Repayment (ICR) plan. Under ICR, payments are capped at 20% of the borrower's monthly discretionary income for 25 years, with any remaining debt forgiven after that time. However, to qualify for ICR, Parent PLUS loans must first be consolidated into a Direct Consolidation Loan.
Another option is Public Service Loan Forgiveness (PSLF). PSLF offers a financial lifeline to borrowers working full-time in qualifying public service jobs, such as for a government agency or non-profit organization. Parent PLUS loan borrowers may be eligible for PSLF if they make 120 (or 10 years) of qualifying payments under the ICR plan.
Additionally, borrowers may explore state-specific initiatives, as many states offer their own student loan forgiveness programs tailored to various professions and industries, such as healthcare or education. Other forgiveness programs and discharges may also be available, including closed school discharge, bankruptcy, disability, and death.
It is important to note that consolidating Parent PLUS loans with other federal student loans is generally discouraged, as it may result in the loss of repayment plan options and eligibility for certain forgiveness programs.
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Frequently asked questions
Parents need to start paying back Parent PLUS loans 60 days after the final disbursement for that academic year.
Yes, you can get a grace period on your Parent PLUS loan if your child is enrolled at least half-time at an eligible school. This grace period lasts for up to six months after your child graduates or drops below half-time enrollment.
The minimum payment on a Parent PLUS loan depends on your income. After nine months of reasonable payments, your loan will be in good standing and the default note will be removed from your credit report.
No, you cannot transfer repayment responsibility of a Parent PLUS loan to the student. If the goal is for the student to ultimately be responsible for the debt, consider cosigning a private student loan.
