Repay Your Direct PLUS Loans

for Parents

You would normally be required to start repaying your loan effective the date the loan is fully disbursed, with the first payment due no more than 60 days later. However, for loans first disbursed on or after July 1, 2008, you can request to defer repayment during the time you or your child are enrolled at least half time and up to six months after you or your child graduate, withdraw, or drop below half-time enrollment. Interest continues to accrue on the loan even during a deferment.

The maximum repayment period is 10 years.

Payments are expected each month.

The minimum monthly payment is $50, but this amount may be higher depending on your loan balance.

You may prepay your loan at any time without penalty. Prepayment may substantially reduce the amount of interest you pay.

Repayment Plans

Below are brief explanations of the variety of repayment plans available to Direct Loan and Federal Stafford Loan borrowers.

Standard:

  • Minimum monthly payment is $50, but may be higher depending on balance.
  • Maximum repayment period of 10 years

Graduated:

  • Begins with lower payments that increase over time
  • Maximum repayment period of 10 years
  • More interest accrues over the life of the loan because the principal balance decreases at a slower rate.

Income-Contingent for Direct PLUS Loans:

  • Adjusted payment amount based on gross income and family size
  • Eligibility and payment amount adjusted annually
  • More interest accrues over the life of the loan because the principal balance decreases at a slower rate.
  • If you do not repay your loan after 25 years, the unpaid portion is forgiven. You may have to pay income tax on any amount forgiven.

Income-sensitive for Federal PLUS Loans

  • Adjusted payment amounts based on gross income
  • Payment is the greater of your monthly interest amount or 4 percent of your gross monthly income
  • Eligibility and payment amount verified annually
  • More interest accrues over the life of the loan because the principal balance decreases at a slower rate.

Extended:

  • Available to new borrowers on or after October 7, 1998, who have a minimum balance of $30,000 in loans
  • Payment amounts can be either fixed annually or graduated
  • Maximum repayment term is 25 years

Reminder

You cannot transfer your PLUS Loan to your child. While some parents and students may agree between themselves that the student will be responsible for making payments on the PLUS Loan, the debt obligation legally remains with the parent.

Consolidation

By the time your student completes his or her education, you may have borrowed several PLUS Loans. A Direct Consolidation Loan allows you to make single, possibly lower, monthly payments. Learn more about consolidation and determine if it’s the right choice for you.

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