PLUS loans are interesting in that they have a slightly higher rate than other student loans. Their fixed rate of 8.5% is not subsidized while your student is still attending college. This is different from the popular Stafford and Perkins loans, which are subsidized during the student’s tenure in school. There are also some fairly steep fees associated with the PLUS loan. If you want to secure extra financing for your student, there is a fee of 4%. This is taken out of each disbursement check.

Repayment for the PLUS Parent loan begins two months after all of the money has been dispersed. Following this 60 day period, there is a lengthy ten year period in which the loan must be repaid. Unfortunately for parents, the PLUS loan does not feature a grace period as with the Stafford loan. There is, however, a deferment program that is offered to parents in which they can capitalize their interest. If parents are enrolled in college themselves, there is an option for deferment there, as well.

Similarly to the Stafford and Perkins loans, a Parent Plus loan is eligible for consolidation after a period of time. PLUS loans must be consolidated on their own, though. They cannot be consolidated along with a Perkins or Stafford loan. In that case, the borrower for the Stafford or Perkins loan would be the student, while the parents would be responsible for the other side of the loan. If a parent happens to have their own Stafford loan, then they could ideally combine their PLUS loan with their own Stafford loan.

There is quite an incentive to consolidating your Parent PLUS loan. As mentioned earlier, the fixed interest rate on a PLUS loan is around 8.5%. Consolidations, however, are capped at 8.25%. This quarter of a point can help you save hundreds or thousands of dollars over the course of many years. By getting creative with your consolidation, you can reap the benefits of different student loan interest rate offers.

Parents PLUS loans are completely the responsibility of the parent. By getting creative with a number of different loans, you can effectively create a financial aid package for your student that will enable him or her to pay for college. The PLUS loan can be a good option for families who have a great deal of equity in their home and have a stable financial foundation on which to build.