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Repayment of PLUS Loans (For Parents)

Note that details provided on this page reference loans made under the Federal Family Education Loan Program (FFELP). Effective July 1, 2010, all new federal student loans will come directly from the U.S. Department of Education (ED) under the William D. Ford Federal Direct Loan Program (Federal Direct Loans). For information regarding Federal Direct Loans, refer to the Loans page of ED's Federal Student Aid website or contact the college's financial aid office. 

If you have taken out loans to help pay for your child's education, it is important to communicate with your lender. This way, you can both determine the repayment plan that's correct for your budget. Effective for loans with a first disbursement on or after July 1, 2006, the interest rate for Federal PLUS Loans is fixed at 8.5%. For loans with a first disbursement on or before June 30, 2006, the interest rate for a Federal PLUS Loan is variable, adjusted annually on July 1, and cannot exceed nine percent over the life of the loan.

If your repayment plan doesn't meet your needs, causing you to miss or fall short of a payment over a period of time, your loan may default. A default can impact you, costing you more money and leaving you with a bad credit rating for up to seven years after the loan is paid in full. A bad credit rating can affect your opportunities for employment, credit cards, future loans, and buying or renting property. Avoid default altogether by selecting the appropriate payment plan. To satisfy default on a loan, you can either pay the loan in full, agree to repay it through a loan rehabilitation program, or apply for loan consolidation.

To help you manage your loan debt, and to successfully repay your loan, stay in touch with your lender, financial aid office or ISAC. Also, read any mail you receive regarding your loan, keep records in a safe place, stay current with your payments, and write your loan account number on all correspondence with your lender, and on your checks.

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Repayment Options

One of the benefits of educational loans (including Federal PLUS Loans) is the variety of repayment options available. Most educational loan payments are set up on a standard repayment plan with monthly payments that remain the same throughout the repayment period. However, other plans are available that may make the payments more manageable. Keep in mind you must contact your lender/holder in order to change your repayment schedule.

Prepayment

  • All or part of your loan can be prepaid at any time without penalty
  • Prepayment may substantially decrease your total interest costs

Standard Repayment

  • Fixed schedule of equal monthly payments
  • Maximum 10-year repayment period

Graduated Repayment

  • Monthly schedule that starts with small payments that increase gradually over time
  • Maximum 10-year repayment
  • Higher total interest than with the standard repayment plan

Income-Sensitive Repayment

  • Monthly schedule that assigns fixed payments for one year at a time
  • Scheduled payments may increase or decrease each year as income changes
  • Maximum 10-year repayment period (can be extended for up to five years)
  • Substantially increases total debt. A return to standard repayment plan as quickly as possible is recommended

Extended Repayment

  • Available if first loan was disbursed on or after October 7, 1998, and if total debt exceeds $30,000
  • Fixed annual or graduated repayment schedule
  • Maximum 25-year repayment period
  • Substantially increases total debt.  A return to standard repayment plan as quickly as possible is recommended

If you borrow a Federal PLUS loan through the Federal Direct Loan Program all of the above repayment options are available except income-sensitive repayment.

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Repayment Option Comparison

The information below compares the "monthly payments" and the "total amount repaid" of the standard and graduated repayment plans using identical 10-year terms and an 8.5 percent interest rate.

Standard Repayment Option

Amount BorrowedMonthly Payment for 10 YearsTotal Amount Repaid
$10,000 $124 $14,879
$15,000 $186 $22,318
$20,000 $248 $29,756

Graduated Repayment Option

Amount BorrowedMonthly Payment for 10 YearsTotal Amount Repaid
$10,000
  • 1st stage: $75 for 2 years
  • 2nd stage: $97 for 2 years
  • 3rd stage: $126 for 2 years
  • 4th stage: $164 for 2 years
  • 5th stage: $214 for 2 years
$16,242
$15,000
  • 1st stage: $112 for 2 years
  • 2nd stage: $146 for 2 years
  • 3rd stage: $190 for 2 years
  • 4th stage: $247 for 2 years
  • 5th stage: $321 for 2 years
$24,363
$20,000
  • 1st stage: $150 for 2 years
  • 2nd stage: $195 for 2 years
  • 3rd stage: $253 for 2 years
  • 4th stage: $329 for 2 years
  • 5th stage: $427 for 2 years
$32,485

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