Parent Loan Consolidation
PLUS loans can be consolidated just like Stafford and Perkins Loans, although a parent's PLUS loan cannot be consolidated with the student's Stafford and Perkins Loans, since the borrowers are different. But parents who have their own Stafford loans can consolidate them together with any PLUS loans they have borrowed to pay for their children's education.
Consolidating PLUS loans provide access to alternate repayment terms, such as extended repayment, graduated repayment, and income contingent repayment.
Note that since the consolidation loan has an interest rate that is capped at 8.25%, consolidating your FFELP PLUS loans can reduce the interest rate by 0.25%. It is best to consolidate PLUS loans separately from Stafford and Perkins Loans to maximize the benefit of this interest rate reduction. However, one should also consider the impact of consolidation on available education loan discounts.
PLUS Loans within the FFEL program have a fixed interest rate of 8.5% for loans with a first disbursement after July 1, 2006. (Previously, PLUS loans had variable interest rates (based on 52 week T-bill rate + 3.10%) capped at 9%.) Within the Direct Loan program the PLUS loans have a fixed interest rate of 7.9%. The interest is not subsidized while the student is in school, unlike the subsidized Stafford and Perkins loans. The PLUS loan charges loan fees of 4%, deducted from each disbursement check. All lenders offer the same rate for the PLUS Loan, although some give discounts for on-time and electronic payment.
Plus loans are no longer available for parents to borrow, but the Direct Loan Program will be able to assist any qualifying parent.