4 Easy Options to Get Parent PLUS Loans Under Control in 2016

Most news related to student loan focuses on struggling graduates of colleges who can not repay their loans.

But do we ever think about parents? We hardly ever heard of parents who are stuck Parent PLUS loans reimburse for their children who have completed an undergraduate degree.

This group of parents is not so small, either. In fact, Parent PLUS loan debt currently stands at about $ 62 billion.

Worse, Parent PLUS loans have higher interest rates among all federal student loans. For the school year of 2014-15 , the rate is 7.21%. In addition, it could increase again on July 1, 2015, when the new rate will be planned for the next school year.

On the positive side, I am pleased to report that many parents PLUS Loan repayment options for student loans are also available for parents. But what the best options  are?
 Let's have a look ...

1) Parent PLUS Loan 

Income-Contingent Repayment Plan 

Pros : 

Lowers monthly payments and offers , after 25 years, Parent PLUS loan forgiveness .

Cons: 

A bit of increase in total interest expense. Requires to pay a higher percentage of income than any other options for repayment plans.

Currently, Pay As You Earn plans and payment based on income are not available for Parent PLUS loans. Therefore, parents must usually pay a larger portion of their discretionary income. But these payments can still be lower than other options.

Parent PLUS loans are eligible for reimbursement based on income if they were included in a federal direct consolidation loan. Income contingent repayment caps payments at 20% of discretionary income of the borrower. Keep in mind that discretionary income is usually less than gross income.

One advantage with reimbursement based on income is that you will qualify for Parent PLUS loan forgiveness after making payments for 25 years. However, same limitations apply as per related for the forgiveness of student loans , so you should see how much is the worth of forgiveness compared to additional interest costs.

To qualify for reimbursement based on income-contingent, your Parent PLUS loan will be consolidated first by the Ministry of Education in a direct consolidation loan. This option is student loan consolidation federal government standard. To request a Direct Consolidation Loan, you must contact your student loan provider.

2) Parent PLUS Loan Refinancing and Consolidation 

Pros : 

Reduces the high interest rates on Parent PLUS loans.

Cons : 

Based on income and credit score , Borrowers can only be qualified and it also denies some of the flexibility options of federal student loans.

Parent PLUS loan consolidation fittingly hits the needs for most parents. In general, college student parents are much more established in their credit history than graduates in their 20s. If you are a parent who has maintained a high credit score, then chances for your approval of student loan consolidation increases.

In general, banks that work with the refinance of Parent PLUS loans like to see a stable income and employment history as well, which will increase your chances of being approved.

However, keep in mind that not all the private student loans have the same repayment options as per described for federal student loans. While you can change the plans of federal student loan repayment at any time, this is not the case with private student loans.

Parent PLUS loans consolidation also covers additional option : Refinancing Your Parent PLUS loans in the name of your child. It is currently offered by Darien Rowayton Bank, CommonBond and SoFi .

3) Public Service Loan Forgiveness (PSLF)

Pros : 

After 10 years eligible for Parent PLUS loan forgiveness .

Cons : 

Limited to certain career fields.

PSLF (Public Service Loan Forgiveness) is a federal program for certain employees of public service, such as those in the fields of government and nonprofit organizations. After 120 payments (usually 10 years) , this program gives the opportunity to all federal student loan debt to be forgiven.

Many graduates on track to take advantage of the public service loan forgiveness do with repayment plans based on income. Just keep in mind that, as mentioned above, the income-based repayment plan option is not available for Parent PLUS loans. Instead, you'll probably need to consolidate your loan with the federal government and Repayment from Income-Contingent option.

Before you are going to apply for the public service loan forgiveness, make sure that you qualify for it. All the rules applicable to other federal student loans generally also apply to the parent PLUS loans.

With any loan option for which you are planning to take advantage from loan forgiveness, make yourself sure that your strategy is the best one. It is possible that you might not have much or any debt that remains for forgiving after the repayment period. This may do more harm than good that you will pay a lot of extra interest yet receiving nothing in return.

4) Standard Repayment Of Parent PLUS Loan

Pros : 

Keeps the total cost down by the repayment for more than 10 years.

Cons : 

Maybe less affordable, given the comparatively high monthly payments.

If you are already paying a Parent PLUS Loan, then you will automatically be entered in the standard repayment plan. As long as you can manage to make the payments, there is nothing wrong with this option. Stay on the right track, and you will have the loans paid after 10 years.

The only problems with standard surface Parent PLUS loan repayment is when you can not afford to make payments. If such cases, instead of risking default, you'll probably want to follow another repayment option.

In addition to the above mentioned options, also note that : repayment and extended repayment options for graduates are also available. However, they are often not preferable to other options listed here.

So what option to choose? The choice really depends on your situation. The best option is usually the one by which you can pay off student loans faster and cheaper.

Whatever method of repayment, all student loans are considered eligible for a  interest deduction of student loans up to $ 2,500 . However, since the deduction is subject to various rules (including the income caps), so go to check our other posts to see if you are qualify.