Repayment of PLUS Loans (For Parents and For Graduate or Professional School Borrowers)

Note that details provided on this page reference older loans made under the Federal Family Education Loan Program (FFELP). All new federal student loans 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 or 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. Use the information on this page to review information about effective interest rates.

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

Income-Based Repayment Option

(effective July 1, 2009)
(not available to parent borrowers)

Borrowers who meet the conditions of partial financial hardship (based on income and family size) may qualify for an income-based repayment plan.

The payment amount will not be more than 15% of the amount by which the borrower's adjusted gross income exceeds 150% of the poverty line for the family size. If the monthly payment amount is not sufficient to pay accrued interest on a subsidized Stafford loan, the U.S. Department of Education (ED) will pay the remaining interest for a period of 3 years; any outstanding loan balance after 25 years will be forgiven.

More information about income-based repayment, including a chart of examples of IBR payments, is available on Federal Student Aid’s StudentAid.gov and the IBR info website.

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

Graduated Repayment Option

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