Parent PLUS Loan Consolidation

Parent PLUS loan consolidation is an option as soon as you have received loan disbursement for the current year. You do not have to wait until your child or children have graduated college, and the process is fairly straightforward. Since the federal government does not charge any early payment or consolidation fees, most parents will benefit from consolidating PLUS loans.

PLUS Loan Description

The PLUS loan program allows parents to take student loans from the Department of Education in the name of a child. It is the parent who owes the debt in the future. Parents can take loans for as many students as needed, and they may be granted additional assistance if they qualify based on income. Loans are disbursed each term. Most parents using PLUS loans will, therefore, have at least two loans per year for a single student. Since many PLUS loan borrowers take debts for more than one child, an individual may have a high number of loans.

PLUS Loan Consolidation Overview

All borrowers who do not have loans in default are eligible for PLUS loan consolidation. This includes both federal student loans and private student loans, but your private lenders may penalize you for repaying debts early and consolidating. You should speak with your lenders individually about this question. One potential penalty is a drop in your credit. However, there are no penalties for consolidating federal loans, and you may do so more than once if necessary. 

PLUS Loan Consolidation Process

Since you are consolidating with the same lender who issued your debt, the process to consolidate PLUS loans is very simple. First, you must request a loan consolidation promissory note online or through the mail. You will do this by submitting an application listing your current loan terms and financial capacity. Within two to four weeks, you will hear back from the Department of Education regarding the proposed terms of a consolidation. If you agree to the terms, you can sign your consolidation and move forward. Otherwise, you must make changes to the forms and mail them back immediately. Finally, within 60 days, you will receive notification from your lenders that your loans have been repaid. At this point, you can stop making payments to those lenders and begin following the payment schedule for your new consolidation loan.

Benefits of PLUS Loan Consolidation

If you are simply consolidating PLUS loans, you will not have any negative credit repercussions. In fact, your credit will go up because your report will show your previous loans as paid in full. Most private lenders will do the same when you repay your debts with a PLUS consolidation loan. You may have to pay a finance charge in order to repay the sums early. However, this finance charge can be well-worth the added expense due to key benefits of the PLUS consolidation loan. One of those benefits is ease of payment; you will write only one check each month. Another benefit is low interest rates available through federal loans. They are typically lower than on private loans, so you may save money even if you incur some fees. 


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