Parent PLUS Loans or Simply PLUS?

The term "parent PLUS loans" is actually overkill, because both the words 'parent' and 'loan' are contained in the acronym PLUS, which stands for Parent Loans for Undergraduate Students. However, since just saying PLUS can be confusing, and since 'parent PLUS loans' is a common phrase in popular use, we shall continue to use the term.

Parent PLUS Loans: Pro-s and Con-s

Why should you think of parent PLUS loan consolidation? Well, the first thing is that without consolidation these loans may get out of hand.
The borrowing scope on a parent PLUS loan is much higher than on many others, because it is given out to the student's parents, not to the student. That's where it gets its name, of course. But at the same time, the interest rate on this is also much higher than loans which are given out to students. As of July 1 2006, the revised rates stand at 8.5% per annum.
Secondly, loans made out to students themselves have a grace period, but a parent PLUS loan has none. A student will start repaying only from six months after graduating, giving him/her a reasonable chance to gain employment and generate income. However, repayments on a parent PLUS loan starts from the first month.

Parent PLUS Loan Consolidation: What's the Deal?

These factors make parent PLUS loan consolidation an attractive choice. Particularly in an economic environment where interest rates are rising or showing signs of rising, consolidation is a good way of managing your debts.
Consolidation fixates interest rates against further rise. Parent PLUS loan rates may get out of hand if you have taken too many loans. If you take separate loans for each year of college, at the end of the student's college period you may find yourself in a bit of a soup with four loan repayments at differing rates. Consolidating at the right time will unite the repayments into a single monthly installment at a tolerable average rate.