Can a Parent PLUS Loan Be Deferred?

A Parent PLUS Loan is a federal education loan designed to help parents cover the costs of their dependent undergraduate child’s college education. These loans are part of the Direct Loan Program, with the parent borrower being legally responsible for repayment. While payments typically begin shortly after the loan is disbursed, options exist to temporarily postpone these obligations. This article explains how Parent PLUS Loans can be temporarily deferred, allowing for a suspension of payments under specific conditions.

Deferring Parent PLUS Loans

Deferment for Parent PLUS Loans provides a temporary pause in loan payments, offering financial relief during certain periods. Unlike some other federal student loans, Parent PLUS Loan deferment is not automatically granted; it must be actively requested by the borrower. This temporary suspension can be beneficial for parents who might face financial challenges or other qualifying circumstances.

The primary purpose of deferment is to help borrowers manage their finances when they are unable to make payments. Situations that may qualify a Parent PLUS Loan for deferment often relate to the student’s enrollment status or the parent borrower’s personal circumstances.

Conditions for Deferment

Qualifying for a Parent PLUS Loan deferment depends on meeting specific criteria, which can relate to either the student for whom the loan was taken or the parent borrower themselves. For loans first disbursed on or after July 1, 2008, a parent borrower can request deferment while the student is enrolled at least half-time at an eligible educational institution. This deferment can also extend for an additional six months after the student graduates, leaves school, or drops below half-time enrollment status.

Beyond the student’s enrollment, deferment conditions can also apply to the parent borrower. A parent can qualify for deferment if they are enrolled in school at least half-time at an eligible institution. Additionally, Parent PLUS Loan borrowers may be eligible for deferment due to unemployment, economic hardship, or active military service. To establish eligibility for these borrower-based deferments, documentation is required, such as proof of unemployment benefits or income statements for economic hardship deferment.

Steps to Defer Your Loan

To defer your loan, first identify your loan servicer by logging into your account on StudentAid.gov. Obtain the Parent PLUS Borrower Deferment Request form, which is typically available on your servicer’s website or the Federal Student Aid website. The form requires personal information and details about the student’s enrollment status or your qualifying circumstances.

Upon completion, submit the form along with any required supporting documentation to your loan servicer. It is important to continue making payments until the deferment request is officially granted to avoid any delinquency.

During and After Deferment

During a Parent PLUS Loan deferment, interest continues to accrue. Unlike some other federal student loans, interest on Parent PLUS Loans always accumulates while payments are paused. This means that even though monthly principal payments are suspended, the loan balance will grow due to this accruing interest.

Borrowers have the option to pay this interest as it accrues during the deferment period. If the interest is not paid, it will be capitalized, meaning it is added to the principal balance of the loan when the deferment period ends. This capitalization increases the total amount owed and, consequently, the future monthly payments, as interest will then be calculated on a higher principal.

Once the deferment period concludes, loan payments automatically resume. Borrowers should monitor communications from their loan servicer regarding the end date of the deferment and the resumption of payments.