May 21, 2009

Parent Plus Loan Deferral Period, Independent Student

Posted in Parent PLUS Loans tagged , at 3:25 PM by dbonvie


In 2008 the rules of the game changed for the better for parents.

Prior to last summer, repayment on a Parent Plus loan began thirty days from the fully disbursed date, which was usually during the second semester. Meanwhile students were enjoying the benefit of an in school deferment on their federal Stafford loan for as long as they were in school half time or greater. This double standard was addressed and now Parents enjoy a similar deferral benefit.

Provided the student is enrolled half time or greater (usually 6 credits) as defined by the school, parents also enjoy the in school deferral benefit; though it’s worth noting that interest will still accrue during that time frame. But what happens when a dependent student (under 24) turns independent in the schools eye? Will the deferral period be terminated? The answer is NO.

Regardless of the students status, independent or dependent, the loan is still deferred whilst they are in school half time or greater. What the independent status does change, however, is the amount of Stafford loan funds which can be borrowed. It also disallows a parent to take out a Parent Plus loan on the student’s behalf.