THE BLOG
12/27/2013 03:55 pm ET | Updated Jan 13, 2015

Can I Consolidate My Parent PLUS Student Loans to Lower the Payment?

Huffington Post Reader Question

Dear Steve,

I have 3 daughters and have borrowed heavily using PLUS loans to finance their education.

I see a lot of things available to students who have borrowed. Is there anything available to parents to reduce interest, extend the term, or reduce the monthly payments on the PLUS loans they obtained for their children's education?

Mark

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Dear Mark,

I'd first look at the Federal Direct Consolidation Loan program. Both Federal PLUS and Direct PLUS loans are eligible to be included as well as the traditional Parent Loans for Undergraduate Students (PLUS).

Actually all of these types of loans are eligible.

Subsidized Loans:
  • Subsidized Federal Stafford Loans
  • Direct Subsidized Loans
  • Subsidized Federal Consolidation Loans
  • Direct Subsidized Consolidation Loans
  • Federal Insured Student Loans (FISL)
  • Guaranteed Student Loans (GSL)
Unsubsidized Loans:
  • Unsubsidized and Nonsubsidized Federal Stafford Loans
  • Direct Unsubsidized Loans, including Direct Unsubsidized Loans (TEACH) (converted from TEACH Grants)
  • Unsubsidized Federal Consolidation Loans
  • Direct Unsubsidized Consolidation Loans
  • Federal PLUS Loans (for parents or for graduate and professional students)
  • Direct PLUS Loans (for parents or for graduate and professional students)
  • Direct PLUS Consolidation Loans
  • Federal Perkins Loans
  • National Direct Student Loans (NDSL)
  • National Defense Student Loans (NDSL)
  • Federal Supplemental Loans for Students (SLS)
  • Parent Loans for Undergraduate Students (PLUS)
  • Auxiliary Loans to Assist Students (ALAS)
  • Health Professions Student Loans (HPSL)
  • Health Education Assistance Loans (HEAL)
  • Nursing Student Loans (NSL)
  • Loans for Disadvantaged Students (LDS)

The U.S. Department of Education website even has a handy online calculator to show you what your payment may be and alternative payment options like an income based repayment program.

As far as interest rates go, the interest rate for a Direct Consolidation Loan is fixed for the life of the Direct Consolidation Loan. The rate is based on the weighted average interest rate of the loans being consolidated, rounded to the next nearest higher one-eighth of one percent and can not exceed 8.25 percent.

You can extended your repayment time using the Direct Consolidation Loan approach and while that will lower your monthly payment it will increase the total you will repay over the life of the loan.

Update: January 13, 2015

I just published this new article which gives new details on how to lower your Parent PLUS Loan payment and even eliminate it for less than you owe using a government program.

Steve
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