student loan consolidation

PLUS Loans offer a smart, convenient and affordable way for parents to pay for their children's college education. In recent years PLUS Loans are also offered to graduate students, if Stafford Loan limits are not sufficient to cover the cost of attendance.

As with Stafford Loans, eligibility is determined through using the Free Application for Federal Student Aid (FAFSA), the student’s financial situation, and the cost of attendance at the chosen school. The FAFSA can be filled out online at www.fafsa.ed.gov.

PLUS Loan applications are made using the Federal PLUS Loan Application and Master Promissory Note (PLUS MPN). After the school certifies eligibility and the guarantee is received, funds are distributed through the school’s financial aid office.

Assuming continued attendance at the same school and using the same lender, the same PLUS MPN can be used for additional disbursements in subsequent years, for up to 10 years.

Guaranteed by the Federal government, the PLUS Loan limit is capped by the cost of attendance at the selected school, less any student financial aid and scholarships.
A PLUS loan borrower must be creditworthy or must have a creditworthy endorser on the loan, namely no derogatory credit currently greater than 90 days past due.

PLUS Loan Terms
Rates and origination fees which can vary slightly by lender, are capped by the Federal government.
Borrowers are responsible for paying the accrued interest from the time the loan is disbursed until it is paid in full.
Repayment of the loan is scheduled over a period of ten years or up to 25 years for borrowers eligible for extended repayments.
ScholarPoint’s PLUS Loan application is currently under development.

Good news for parents— though PLUS loan rates did increase in 2006 to 8.5%, the Higher Education Reconciliation Act left one loophole that allows a .25% interest rate reduction just for consolidating. The loophole works by taking advantage of the 8.25% rate cap on consolidated student loans. Since this cap is less than the 8.5% interest rate of the PLUS loan, a consolidated PLUS loan automatically assumes the lower rate.

When to consolidate PLUS loans
Parents can consolidate student loans immediately after the funds are disbursed. Graduate students who take out PLUS loans under the new guidelines will need to wait until after graduation to refinance student loans. Even if you don’t want to extend the repayment period in order to reduce payments, there’s no reason why you shouldn’t consolidate in order to lower the interest rate to 8.25%. When you consolidate student loans with ScholarPoint, you’ll also earn an additional incentive that can reduce your interest rate by another .25%.

What are the repayment terms on a consolidated PLUS loan?
The repayment period of a PLUS loan begins 60 days after the funds are disbursed and the standard repayment period is 10 years. One of the many benefits of consolidating student loans is the ability to extend the repayment period from the standard 10 years up to a full 30 years. However, if your plan is to repay the loan faster, make sure to verify with the loan consolidation company there are no penalties for early repayment. At ScholarPoint, we never charge fees if you choose to pay off your balance early.

How to Consolidate PLUS Loans
There is no collateral and no credit check required in order to apply for an FFEL consolidated PLUS loan. ScholarPoint’s process is simple, free and can be completed entirely online. Apply now and see how much you’ll save with ScholarPoint!

Get in-depth information about student loan consolidation and how to best use student loans to finance your college education. Bookmark this page and check it regularly for the latest student loan news and ScholarPoint Feature Stories.

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