PLUS Repayment Options
PLUS Loan Repayment Plan Options
Parents have four repayment plans from which to choose to repay
their PLUS loans: the standard, the extended, the graduated, or the
income-sensitive repayment plan.
The STANDARD REPAYMENT plan is a 10 year plan. The minimum monthly
payment is $50. Borrowers are initially given the standard plan but
may request a different plan.
The EXTENDED REPAYMENT plan allows for an increased length of time
to pay off the loan. If you have borrowed a total of $30,000 or more
in PLUS loans from the same lender, you can qualify to pay off the
loans over 25 years. This will lower the monthly payments but
increase the total interest paid. But, remember that you may pay
extra on your loans as there is no pre-payment penalty. This is NOT
the same as loan consolidation (see below).
The GRADUATED REPAYMENT plan is for 10 years but the payments in the
first few years start out low and increase over time. The graduated
period is usually during the time when the student is enrolled.
During this time the monthly payment is usually only the interest
charged, making the monthly payments much less than the standard
plan. Once the interest only period has ended, however, the monthly
payments must increase significantly in order to pay off the amount
borrowed in the short period of time remaining on the loan. For
example, if you choose this repayment plan, and opt for the interest
only period for three years, the monthly payments during the first
three years will be interest only. Then, the payments will include
interest and principal and will need to increase enough to pay off
the loan in the remaining seven years.
The INCOME-SENSITIVE REPAYMENT plan allows borrowers to pay a
smaller monthly payment for a period of time. This plan uses the
borrower's income to help determine the lower payment amounts. The
repayment period is 10 years so the payments need to increase over
time to pay off the loan within the 10 years.
Note that some of the features of each repayment plan may vary among
the various lenders and servicers. To know what your specific
options are, contact your loan servicer.