Retirement & Financial Planning Report

Under a federal program, parents of college students can use PLUS loans to borrow the full cost of attendance, minus any financial aid package. They come from two sources:


Direct from the federal government. If your child’s school participates in the direct lending program, you can get PLUS loans at a fixed interest rate of 7.9 percent.

From private lenders. Most schools do not participate in the direct lending program. If your student goes to a non-participating school, you can get PLUS loans from private lenders at a fixed interest rate of 8.5 percent.

For PLUS loans taken out after June 2008, repayment can be deferred until six months after your child leaves school. Previously, repayment of PLUS loans had to begin within 60 days after the money went to the school. If you decide to defer repayment, unpaid interest is added to the loan balance.

PLUS loans go to creditworthy applicants. However, under a new federal law, late payments of a few months occurring in 2007, 2008, and 2009 might not result in a rejection of a PLUS loan application.