Parent PLUS Loans and Parent Loan Consolidation | 03.19.08

Posted in Consolidation By Student Loan Network Staff

Parent PLUS loans are Federal based loans taken out by a Parent on behalf of a child. Here are some quick facts about the loan before I touch on the consolidation of these loans:

1. These loans are taken out by the parents in their names, and can NEVER be transferred to the students name when they graduate

2. The student has no obligation to repay this loan

3. The payments on these loans start right away… they are not deferred because the child is in school (this is not the case with Stafford loans).

4. A parent plus loan is not a joint loan between 2 parents… even if the parents are married, only one parent applies for the loan and the loan will be under that parent’s name and associated Social Security number.

A typical college student is in school for four years. Let’s assume a parent will be borrowing 4 plus loans in total; one for each school year. The loan is typically applied for in the summer time… and half of it is disbursed for Fall semester, and the 2nd half will be disbursed at the start of spring semester. The loan payments will not begin until the loan is fully disbursed, so spring semester is when the parent will receive their first bill.

The following year, the parent repeats this process, and spring of their child’s Sophomore year they want to consolidate the 2 loans together. I say spring because you cannot consolidate a loan that is not fully disbursed. So to apply for a loan consolidation for your 2 loans..you simply fill out a Consolidation Promissory note with the company of your choice. Your loan payments will then be paid back to the company you chose, instead of your initial lenders for the loans.

Let’s add another child to the mix… many times parents have multiple children in college at the same time. Let’s say Dad and Mom have two children, Ben and Molly. Ben is a freshman at College X and Molly is a Junior at college Z. Dad has borrowed a plus loan for Molly for each year she has been in school. He wants to do the same for Ben. Dad CAN consolidate his PLUS loans together even though they are for 2 different children. However, if mom applied one year, with her Social Security Number, her PLUS loans cannot be combined with Dad’s PLUS loans. So keep that in mind when borrowing – it should be the same parent every year, unless you have no plans to consolidate.

One last fact about the PLUS loan is that its forgiven if: the parent that borrowed it becomes deceased OR the child that it was taken out for becomes deceased. Post any questions you may have about this loan.


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39 Responses to “Parent PLUS Loans and Parent Loan Consolidation”

  1. Rosie says on May 19, 2013 at 1:23 pm:

    The whole thing come down to a moral agreement between the parent and the student, I took out PP loans for my daughter 10 years ago, the agreement was I paid the interest during her education and full payments for a year after graduation, this worked, only one time was she in a difficult situation for repayment, I fortunately was able to cover it while she transitioned at that time.We did not need to use forbearance/deferment. My understanding is that one or the other, both? can only be utilized for 36 months during the life of the loan. Her loan is now paid in full. I did the same for one of my sons, Unfortunately, he has made very few payments on his loans and I have been burdened with his 30,000 debt @ $400 a month, he has used his 36months and the interest(8.9)added close to 2 grand on the original loan. as it is my credit that will suffer, I have to make the payments and forgo health insurance as I work for myself, I feel for ANYONE having to pay these loans, sadly it’s for some the only way to get our kids through college.and sadly some agreements are not held up. Does anyone know if I have any recourse, I cam across this forum while looking for advice.

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  2. Randy E. says on April 2, 2013 at 9:39 pm:

    I have a Federal Plus loan which i am paying on behalf of my eldest child. My second child will be entering college this fall and i intend on taking out a second PLUS loan for her tuition and hopefully consolidating the two. I am a public service employee and have read about the possibility of loan forgiveness on the remaining loan balance after (10) ten years. If deemed eligible does the ten year period begin following my second child’s graduation or immediately after the loan consolidation / my first payment?

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    • Student Loan Guru says on April 4, 2013 at 9:16 am:

      I believe it begins once you consolidate (providing you do not add more loans in the future). It may reset if you consolidate again to include more loans. I would suggest contacting the Department of Education for more information: 1-800-433-3243.

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  3. PA mom says on January 29, 2013 at 10:49 am:

    I have a Parent Plus loan for 40,000 + After making payments for a year totaling over $5,000 the balance due is only 1,000 lower than what we started at – how do you get caught up on these loans. Is there a way to have payments applied to interest only? It seems like a snowball that just won’t stop – please help me figure out what to do here. I’ve even been paying $100 more a month to get ahead – seems like I’m just falling further behind :(

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    • Student Loan Guru says on January 30, 2013 at 11:15 am:

      Any over-payment you make should go toward the loan principal. By doing this, you’ll begin to decrease the amount of interest that accrues on the loan. When making a payment, specify to your loan servicer how the funds should be applied, and hopefully, this will allow you to catch up with the interest.

      If you need repayment relief for any reason, make sure you contact your servicer right away for your options.

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      • PA mom says on January 30, 2013 at 3:14 pm:

        Thank you for the information – I will contact them and see about getting this done right away!

  4. Dave says on November 30, 2012 at 7:07 pm:

    We are currently in enrollment deferrment on my wife’s PLUS loans for our daughter because she is still an undergraduate student.

    The enrollment deferrment is valid until 5/3/15 according to our servicer on the loans, however our daughter is getting her bachelors degree in 3 years and will graduate in 2013 and then most likely start graduate school in the Fall. She will also be taking a “grad” PLUS loan in her own name for her graduate school tuition.

    Our question is can the enrollment deferrment continue for my wife’s undergraduate PLUS loans while our daughter is in graduate school full-time?

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    • Student Loan Guru says on December 3, 2012 at 9:55 am:

      Yes, your PLUS loan should still be eligible for deferment as long as your daughter remains enrolled at least half-time. You should note, however, that interest does accrue during deferment periods, so making payments (if possible) will help keep the cost of the loan down over time.

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  5. Elijah says on November 23, 2012 at 12:04 am:

    My parents insisted that college was my only option. I had great grades and got into a decent private school, but only received about half the tuition in grant aid. My father had to take out 76,000 in PLUS loans to compensate for what my grants and Stafford loans did not cover over 4 years. I agreed to pay this debt back, but my father and I were under the impression that this loan would be transferable and it IS NOT. I am now responsible for paying $103,000 in student loan debt with no current prospects for earnings in a suburban area because of the recession. however, I can’t afford to move out to take advantage of employment opportunities because I need to pay 1,000 a month just for these loans. What about rent? Health insurance? Forget about savings. My kids won’t be able to go to college. How can this cycle be broken? Either my father or I have to die. Lovely. This government needs SERIOUS reform.

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    • Dave says on November 30, 2012 at 6:51 pm:

      Your dad is responsible for the PLUS loan debt, not you. He realizes that right? I assume so since you stated you found out it is not transferrable.

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      • Rosie says on May 19, 2013 at 1:12 pm:

        Dave, Her dad is “responsible” it’s his legal debt, but Morally SHE is responsible, it terrible that these “kids” get out of school with debt, it’s a perpetual gold mine for AES, however, is it OK to say that her father is responsible, a man that has worked all his life, prob can’t retire,he should no way be burdened with this. it’s her responsibility … you know that right?

  6. Missy says on March 15, 2012 at 10:04 am:

    I think it’s unfair that these students don’t qualify for their own loans because they have no credit and part time jobs so in order to go to college the parents have to co-sign which ties up their credit on a credit report and puts them at risk to have to pay it off. What if we would have refused? well then she couldn’t have went to college so what choice did we have. We aren’t the right race to get it paid for like some and even with wonderful grades and honor roll through high school she didn’t get anything at all. They said we make to much money (WE) not (HER) so what does that matter if she is the one who will end up paying for her schooling. It’s just not right and not fair. People who work hard to make a living, have a nice house, and take great care of their children in the end get screwed. People who “act poor” and live in crappy rental houses, let their kids run wild end up getting grants and scholarships for their kids to go to college for free???WHAT??? how is that fair.
    To these young adults crying about the parents asking you to pay the loan payments now that they took out for you…SHUT UP. Why shouldn’t you? its your schooling not theirs, they raise you to the adult you are and are they asking you to pay them back for all that? Its your future and your responsibility. I am sick of these kids who expect their parents to be in debt until they die raising them even as adults.

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  7. Ramona Thomas says on November 21, 2011 at 6:15 pm:

    I currently have four Federal Parent Loans for my son totaling $56,868. I am interested in a consolidation loan. Please contact me via email. Thanks.

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  8. Bill Edwards says on June 22, 2011 at 11:20 pm:

    My ex-wife promised to pay back our daughters sophmore year if I payed for her freshman. Needless to say she couldn’t qualify for the PLUS loan, so I got it. Of course now she says she won’t pay it back and I’m stuck with both loans. Do I have any legal recourse with her?
    Thanks,
    Bill

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    • Student Loan Guru says on June 23, 2011 at 8:43 am:

      @Bill- Technically, the PLUS loan is the sole responsibility of the parent whose name it is in. From the Department of Education standpoint, she has no legal obligation to pay. If you have a legal agreement where she promised to repay the loan, then you should talk to a lawyer about this, otherwise, you have sole responsibility.

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  9. Teresa says on March 17, 2011 at 7:29 pm:

    Our situation includes twins going to college next fall–one at an in-state public school, the other at an out-of-state public school. We don’t qualify for anything but loans, student and parentPlus. I assume we take out a loan for each child/school? Can these be consolidated next spring? Then we take out 2 more the sophomore year and consolidate 3 loans (first year already consolidated, plus the 2 second year loans) in the spring? and so on until graduation? If we have good-excellent credit rating, will we be able to borrow up to the cost of attendance at both schools each year?

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    • Student Loan Guru says on March 21, 2011 at 1:42 pm:

      @Teresa – Sounds like you’re doing a good job preparing for the costs of your childrens’ education. First off, if you qualify for federal loans (Stafford and PLUS) the only payments necessary while in school are interest payments. You may consolidate the loans through the Direct Loan program. However, the federal Stafford Loans are in your child’s name, and the PLUS loans are in your name and they cannot be consolidated together. Also, each time you consolidate, the interest rate going forward will be an average of the loans. If you take out private loans (which are the ones that will cover up to the full cost of attendance), those also cannot be consolidated with the federal loans. Be careful that your consolidation process doesn’t become even more complicated than having numerous loans out in both your childrens’ names and your own names. Good luck! This website has more information on consolidation: http://www.studentloanconsolidator.com/

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  10. Bob Griese says on January 23, 2011 at 1:46 pm:

    My wifes dad took on parentplus loans, and is now asking us (recently graduated) to pay his part of the parent plus loan; there is no way we can do this longterm. Not sure what to do, we don’t want him to go bankrupt, or lose his house, but we both in our early 20′s and would wipe out any saving we could do.

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    • Student Loan Guru says on January 31, 2011 at 5:38 pm:

      @Bob: Look into consolidation – try to knock the payment down a little and work with his dad on how you guys can try to pay it off together. Good luck!

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  11. Becky says on August 21, 2010 at 2:48 pm:

    Really, this SUCKS~ I had no idea the loan was going to be in my name and get stuck with it forever. I thought I was co-signing which the loan representative never explained this to me. My daughter has a current loan from Sally Mae for culinary school 35grand, then decided she wanted to be a baker went to le Corde on bleu in Pasadena. I signed papers thinking i was co signing. Then a get a bill for 450.00 for 10 years, put into deferred it and now a 35, 000 loan is 42 thousand. That is the 1st dam loan, then I get another bill for 5 thousand in Parent plus loan and payment is $150.00. WHAT!!!!!!!!!!!!!!!!!!!!!!!!!!!! ok now i am pissed Today a get a bill for $57,000 I owe in student loans that do no belong to me. To put the topping on the cake my daughter did graduate but is pregnant now. ok now what, she cant work for to long and her fiance has his 35,000 student loan. THis really sucks. I can never pay this off.

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  12. P.Lub says on June 21, 2010 at 9:11 am:

    Can the department be petitioned to have the loan become transferrable it is not fair to the parent. My mother took out a loan for my sister she was supposed to pay back she went to grad school and was able to get her own loans and was to payback the loan under my moms name; but was a skeeze instead and lived big on her loan money; didn't pay my mother back and now she a Grad school graduate with no job, living off of unemployement in our garage and I think her unemployment should be garnished if they are considering garnishing my mother's wages. The student should be made liable after their parent helped them out!

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  13. Deb Wilson says on February 18, 2010 at 1:01 pm:

    My story is the same…daughter went to expensive college, I took out 2 Plus loans, she was told the loans could be transfered to her name after graduation, she promised to pay the loans, now she's in Germany, I'm 53, make under $20,000 a year and making 2 loan payments that they will not let me consolidate. This is the 1rst and only time in my life I have gotten myself into a bad financial state…now that I am at a time in my life when I would like to slow down a bit it looks like I will be wrking 4 jobs(50hr/wk) for the next 30 years. An my friends want to know why I don't take the opportunity of a lifetime and go to Germany to see her. The only way I could go is if I could swim that far…

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  14. Dave says on January 26, 2010 at 4:12 pm:

    I have a parent plus loan out no.1 loan for $14,000.00, the next year no.2 $10,000.00. These loans are in repayment. I owe now about $19,000.00.
    Can these consolidated for lesser amount of interest lower than 7.99%. Today, I’ve put both loan indeferrment, but will matk interest only.

    Thank you,
    Dave

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  15. Denise says on July 29, 2009 at 5:49 pm:

    Re: Ronnie and Kenia
    I am in the exact same position. I graduated a little over a year ago. I am a teacher and just got married and am trying to buy a house. My mom found out how much we make (not taking into account that we are about to have to start making payments on a HOUSE)and is insisting I start paying her loans. As a teacher, I really do not make that much money; my husband makes even less. We already shell out hundreds a month for our student loans. I understand where she is coming from (my 2 brothers are at an expensive school with no scholarships) and I know she will need help in a few years to pay. I just don’t know if I will be able to afford it; right now it’s a house payment, but in a few years it will be my own kids! If I had known this, I would have made college less expensive from the beginning.

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    • Missy says on March 15, 2012 at 9:55 am:

      It’s your schooling and you are now an adult- It’s YOUR responsibility to pay it. Why should your mother struggle after raising you to the adult you are with a loan that wasn’t even for her schooling. That is not fair and not respectful to your mother. I am sure there are things YOU could do without at your age and let her start to have money and enjoy the rest of her life.

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  16. kenia says on May 29, 2009 at 4:42 am:

    in reply to Ronnie: I’m in the same boat! I was on my way to teach english abroad after graduation until my father said to me that I can’t because I need to get a high-paying job to pay his parent plus loan along with my loan ($1000 a month). Why did he wait to tell me that?!?! If i knew that then I probably would of majored in a subject that’s known to pay new graduates A LOT rather than “following my dreams”…not to meantion that this recession is so bad (been job-hunting for a year)! He also wants me to go to a “cheap” graduate school in order to get a high-paying job but if I do that then i definitely won’t be able to pay him back because I will be too busy paying for graduate school! This is INSANE!!!! I don’t know what to do!

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  17. Tina says on April 26, 2009 at 11:21 am:

    Steve write the following: “It would be nice, but I am next expecting anything soon. I’m 55 but the Dept. of Ed has allowed me to consolidate my middle son’s Plus loan with a 30 year repayment plan. If I make to 85, I’ll be happy, but if I don’t the debt willbe discharged. Is it any wonder our government is going broke?” My question is what steps did you do to get it consolidated with a 30 year repayment plan. I am 54 and I need to ge this done. I

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  18. Ronnie says on February 18, 2009 at 10:13 am:

    My mother took out Parent plus loans for my 4 year degree, I never knew that she expected me to start paying them once I graduated, but thats what she told me right after graduation, I wish she would have brought this up before I started, I have my own Student loans (which I am perfectly ok with paying), but there is no way that I can afford to pay the Plus Loans, I don’t know how to tell her no though, so students, be REALLY careful in deciding how to pay.

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  19. Steve says on January 22, 2009 at 8:28 pm:

    Plus loans are a convenient way to help finance a college education. One benefit is that a portion of the interest is tax deductible. My kids also pormised they would pay me back for the Plus loans I took out for them. It would be nice, but I am next expecting anything soon. I’m 55 but the Dept. of Ed has allowed me to consolidate my middle son’s Plus loan with a 30 year repayment plan. If I make to 85, I’ll be happy, but if I don’t the debt willbe discharged. Is it any wonder our government is going broke?

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  20. Earl says on November 13, 2008 at 6:50 pm:

    My children assured me they would pay the loans when they graduated. They now refuse to do so and I cannot afford to pay. Needless to say we no longer talk.

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  21. Missy says on October 30, 2008 at 8:08 pm:

    Let me just say to any potential student or borrower: NEVER NEVER NEVER take out a PLUS loan as a parent for your child and as a student, NEVER NEVER NEVER take out a PLUS loan from a parent. The loan can NEVER be transferred to the student and if the student graduates, 9 times out of 10, they have the hardest time making that payment. And if they don’t the parent is responsible – even if this loan ends up being 30 years old. I know – my parents took out these loans for me and my brother when we were young and didn’t have a clue about what the loan meant. And sure we both had every intention of paying this loan back. But I had no idea life would get in the way and now the loan has gotten so high over the years because of their outrageous interest rates and at this rate, it’s like making a payment toward a house. And it breaks my heart to think about how my parents worry about this loan being on their credit. And yes it’s in good standing and paid on time but it’s still there against their FICO score. So think long and hard before you do this – this is my biggest regret about my college years and if I could go back, I would have never took the loan out and worked my butt off at McDonald’s to pay my own way.

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    • Dave says on November 30, 2012 at 7:10 pm:

      It does suck that the loans are so much and so expensive but mcdonalds is not going to pay for a college education, no matter how much or how hard one works. This is why PLUS loans are sometimes the only answer. I hope your parents knew what they were signing when they took out the loans for your education…we love our kids and that is why we do things like pay for their education any way possible.

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  22. David says on May 25, 2008 at 8:19 pm:

    Culinary Institute of America is a ripoff – if you don’t have the money to go to school, don’t borrow it. The kind of job you are going to start with will only pay you around 30K a year – you will never pay off your loans. So if you want to go, pay as you go.

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  23. Evelynn De Jesus says on April 2, 2008 at 7:45 am:

    I have a question about the federal Plus loan? If is only allowed for the parents to take out this loan, then it means the parent must have good credict? Can my parents borrow the total cost of 4yr degree program? Or only borrow pre year? What is the interest rate after the 6 months of graduation, when my parent borrows up 160,000 for my for years? Is there a way my parent can have a payment plan or is this not possible? My mother is a single parent rasing three girls and has bad credit. I’m the second child strating my freshman year in 06/16/08 in the Culinary Institute of America. Per semester the total cost is 30,000 and I also do not have any credit. I need some guidance, HELP?

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    • Beck says on August 21, 2010 at 2:54 pm:

      run…………………………..my opinion. You will end up making the same amount of money just getting a regular job. Work, find out what it takes to survive without relying on your parents, live out on your own, get a roommate, pay your cell phone, home bills, insurance, car payments, then you will know what to do. You will see that you cannot afford it but don't get into dept it is terrible. You will never see the pay off at the end because you will be 40 years old and still paying off a loan.

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  24. jrudy says on March 20, 2008 at 2:19 pm:

    If you have written documentation of this, you can petition the FSA Ombudsman for assistance – http://www.ombudsman.ed.gov – as PLUS loans cannot and have never been transferable to the student.

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  25. Cierra says on March 20, 2008 at 10:32 am:

    What if a student was given information (by a working member in the financial aid office) that wasn’t updated and it effected the payment for their loan? For example: The student was told that the Parent Plus Loan could in fact be transfered to the student’s name once the loan is distributed to them and that it would be forgiven after the student starts working for a title 1 school in Kentucky. Now, the student has learned that the loan would not be transferred to the student and it’s not forgiven. So, what is one to do?

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  26. David E. Bonvie says on April 27, 2009 at 7:44 am:

    To consolidate your federal loans the Department of Education is your best resource. They may be reached at 800-557-7392. Generally speaking to get a 30-year term is dependent on the amount that you owe.

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