Repayment of Direct PLUS Loans

Parents would like to assist their children who are going to college. There are students who are lucky enough t have their parents pay everything in college and there are students who work part time jobs to stay in school. There are also parents who take out loans to help their children in college. There are many types of loans which parents can apply for. Parents can get a guaranteed $5000 loan through signature loans for bad credit and various other loans. One popular loan which parents take out to support their sons and daughters in college is the PLUS loan.

There are various payment plans for PLUS loans. There is the standard payment plan which requires a minimum monthly payment of $50 but it can be a little higher depending on the balance and this has a maximum repayment of 10 years.  There is also the graduated payment plan. This plan is different from the others because of the fact that it starts with a low payment which slowly starts getting bigger. This also has a maximum repayment of 10 years. The principal balance decreases at a much slower rate so the interest accrues.

There is also the extended payment plan which is available to people who borrowed after 1998 with a balance of not less than $30,000. The payment can be fixed annually or it can also be graduated and this has a maximum repayment length of 25 years. The income-contingent payment plan adjusts the payment according to the size of the family and its gross income. Borrowers cannot pay lower than their monthly interest amount. Loans not yet paid until after 25 years are forgiven but the annual tax still needs to be paid.

There is also the income-sensitive payment plan which is similar to the income-contingent payment plan. The monthly payment should be greater than the amount of the monthly interest or 4% of the gross monthly income.