May 4, 2009

Are Parent Plus Loans Subsidized?

Posted in Parent PLUS Loans at 8:12 AM by dbonvie

Parent Plus loans are not subsidized by the federal government like the Perkins loan and many Stafford loans, which are both in a students name. By subsidized of course we mean the government picks up the interest on the loan while the student is in school.

Parent Plus loans are unsubsidized meaning the borrower is responsible for the interest accruing during the life of the loan from the date of disbursement. Now since the Plus loan does not need to be repaid until after a student falls beneath a part time or greater status (in many cases this is after the student graduates) hundreds or in some cases thousands of dollars in interest may accrue.

Just keep in mind that you can make interest only payments while the student is in school if you so choose. This will help with the total principle and interest owed once the repayment period begins, as the interest is capitalized after each quarter.