You can consolidate parent PLUS loans once they have been fully disbursed. Two consolidation programs--the Federal Family Education Loan (FFEL) Program and the Federal Direct Loan Program--have historically been available although many FFEL lenders no longer offer consolidation loans. If your FFEL lender does not offer consolidation loans, you are still eligible to apply for a Direct PLUS Consolidation Loan even if you don't have a Direct PLUS loan.
Consolidating PLUS loans can provide the convenience of one monthly payment. Keep in mind, however, that you may end up paying a higher interest rate on some of the loans. You may also pay considerably more interest over the life of the consolidation loan than you would if you paid each loan separately, particularly if the length of time you have to repay the consolidation loan is extended.
Calculating Your Consolidation Loan Interest Rate
The interest rate for a consolidation loan, which is calculated using a formula set by federal statute, is fixed for the life of the consolidation loan, and cannot currently exceed 8.25 percent. The federal formula calculates a weighted average of all the loans you include in a consolidation loan, taking into account the amount(s) you borrowed and the different interest rate(s) of each loan. The Federal Direct Consolidation Loan site has interactive calculators that can help you estimate your consolidation loan interest rate and the amount of your monthly payment under a variety of repayment plans.
Applying for a Consolidation Loan
If you have FFEL loans, contact your lender to see if they offer consolidation loans. If so, they can provide information on how to apply for a FFEL consolidation loan. Parents with PLUS loans who apply for a consolidation loan through the FFEL program are not required to pass a credit check; parents with PLUS loans who apply for a Direct Consolidation Loan must undergo a check for adverse credit history.
If you want to apply for a Federal Direct Consolidation Loan, go to their website (https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp). Once you have completed an application and signed the promissory note, the approval process can take from 60-90 days. During that time, you should continue to make payments on all your loans. If your consolidation loan is approved, you receive a statement of the loan(s) being consolidated for review.
Once all of the information is correct, the loans that you have included are paid in full and your loan consolidation account is set up with the Direct Loan Servicing Center. If you included all of your PLUS loans in the consolidation, you now have one monthly consolidation loan payment.
About the Author:
Judi Sandall is a graduate of the State University of New York, with a BA in English Literature. She is a technical writer and editor who worked in student financial aid for over 20 years.
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