Consolidating direct plus loans

The direct PLUS loan is a federal student loan that can be taken out by parents to help pay for their child’s college education, or by graduate and professional degree students.

To qualify you’ll need to file a Free Application for Federal Student Aid, or FAFSA.

While PLUS loans can be taken out by both parents and graduate students, Colleen Campbell, associate director for postsecondary education at the Center for American Progress, said the interest rates on PLUS loans were initially made higher “with the understanding that parents have, conceivably, an income, that they’re earning to repay the loan, whereas for students, their income is not guaranteed.” Campbell also said the department was able to justify making PLUS loans carry higher interest rates because they were meant to be an additional resource to pay for college and not the primary means.

Due to the higher interest rates and fees, graduate students should maximize unsubsidized loan offerings before taking on PLUS loans.

Federal student loan borrowers have the option of consolidating their loans via the Direct Consolidation Loan program offered by the U. That loan is then serviced by the servicer of your choosing – of which Nelnet is one!

Consolidating allows you to merge multiple eligible loans into a single loan.

Direct PLUS loans should be used only to cover gaps in college expenses not filled through grants, scholarships, work-study, other federal student loans or out-of-pocket funding such as savings, income or gifts.

We believe everyone should be able to make financial decisions with confidence. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. " Direct PLUS loans, used by parents and grad students to pay for college, differ from the typical direct loans for undergraduates in key ways.But, income-driven repayment plans are only available for direct PLUS loan borrowers who are graduate or professional degree students, or to parent borrowers who consolidate their PLUS loans into a direct consolidation loan; they would then be eligible for the income-contingent repayment plan.Graduate or professional student borrowers don’t have to make loan payments while still enrolled at least half-time and for the six-month grace period after leaving school.Graduate PLUS borrowers having difficulty making payments may opt for an income-driven repayment plan.Parent PLUS borrowers do not have this option available unless they first consolidate their PLUS loans; they can then opt for the income-contingent repayment plan.

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