How to Consolidate PLUS Loans

PLUS loans are one of the most important financial tools used for funding post secondary education. The loans are provided to parents of students that are enrolled in graduate or professional schools at least part time. PLUS stands for Parents Loan for Undergraduate Students and as the cost of graduate school is expensive, many find that obtaining student loans for undergraduate school is often difficult. PLUS loans are known for having low interest rates as they are subsidized by the federal government. PLUS loans can be applied to multiple aspects of education including tuition, room and board, books and other necessary supplies. Due to their low interest rates, many parents find that PLUS loans are a great choice. Those who have multiple loans for their children’s education, may find that there comes a time when consolidating PLUS loans is a wise choice.

Federal loans such as Stafford, Perkins and the PLUS may all be consolidated. It’s important to note that parents can obtain a new PLUS loan each year and then choose to consolidate the loan for a better interest rate as well as to establish a new system for repayment. Since PLUS loans are taken out by parents, students do not have anything to do with the consolidation or loan process in general. Likewise, as students take out Stafford and Perkins loans, it is the student’s responsibility to handle consolidation of those loans themselves.

In addition to PLUS loans, some students will obtain both federal and private student loans to pay for graduate school. It’s important to understand that you cannot consolidate federal and private loans together but federal loans must be consolidated through the U.S. government. Private loans can be consolidated through various companies or through the financial lender or institution from which they were obtained.

There are certain requirements that must be met in order to qualify for federal loan consolidation. These include the e amount of the loan or the amount of the loans combined together and whether or not the student is achieving school less than half time, has graduated or has left school entirely. There are also rules and regulations that govern how many consolidation applications may be out at one time.

PLUS loans have many benefits including the ability for borrowers to obtain loans that will cover the full cost of a student’s education. It’s important to ensure you don’t over borrow so determine the full amount of your child’s education and subtract the amount of other grants, scholarships and other student loans to determine the exact amount you need. Those interested in obtaining PLUS loans should contact their child’s school’s financial aid office to determine their options. They may also find that filling out an FAFSA can help determine additional student loans that the borrower may qualify for.

It’s important to understand that not everyone is approved for a PLUS loan. PLUS loans are subject to credit approval and those who’ve had bankruptcies, or have a history of late bills, including those more than 90 days late may find that they are ineligible to obtain a PLUS loan. If you have been turned down for a PLUS loan you may need to find a co signer with good credit in order to qualify. Students whose parents have been rejected for student loans may find they qualify for Stafford loans for a greater amount. Parents who earn more than $145,000 combined income may not be able to claim taxes for their PLUS loan payments. If you have questions regarding filing taxes and PLUS loans be sure to question your tax advisor.

Those who wish to consolidate their PLUS loans may do so after the funds have been thoroughly disbursed. If you have any questions regarding consolidation speak to your lender immediately.