Can Parent PLUS Loans Be Deferred for Graduate School?

Parent PLUS loans are federal education loans for parents to help cover a child’s undergraduate or graduate education costs. These loans can assist with expenses like tuition, fees, room, and board, beyond other financial aid. Parents often ask about postponing payments, especially when their child continues to graduate school. Parent PLUS loan payments can be deferred while the student is enrolled in graduate school, provided specific conditions are met by both the borrower and the student.

Understanding Deferment Eligibility for Graduate School

Deferring Parent PLUS loan payments requires meeting specific criteria, primarily centered on the student’s enrollment status. The student for whom the loan was obtained must be enrolled at least half-time at an eligible educational institution. Half-time enrollment is typically defined by the school, representing at least half of a full-time academic workload. This deferment option extends while the student is actively in school and for an additional six months after they graduate, withdraw, or drop below half-time enrollment.

To qualify, the Parent PLUS loan must be in good standing, meaning it is not in default. Deferment for a Parent PLUS loan is not automatically granted; borrowers must actively request this postponement of payments. Confirming the student’s enrollment status with their graduate institution is a necessary step, as this information will be required to demonstrate eligibility for the deferment.

Applying for Parent PLUS Loan Deferment

Applying for Parent PLUS loan deferment begins by identifying your loan servicer. Borrowers can typically find their federal loan servicer by logging into their account on StudentAid.gov. Once the servicer is identified, the next step is to obtain the “Parent PLUS Borrower Deferment Request” form, which is usually available on the servicer’s website or through the StudentAid.gov portal.

The deferment request form requires detailed information about both the borrower and the student, including personal identification details for the borrower and specific information about the student, such as their name, the school they are attending, and their enrollment dates. After completing the necessary sections and signing the form, it must be submitted to the loan servicer. Submission methods often include mailing the form, uploading it through an online portal, or sending it via fax. Deferment can also be requested as part of the initial Parent PLUS loan application through the student’s school.

Interest During Deferment

While deferment provides a temporary reprieve from making loan payments, it is important to understand the financial implications, particularly regarding interest. Interest continues to accrue on Parent PLUS loans throughout any period of deferment. This means that even though payments are paused, the total amount owed continues to grow.

Interest capitalization is a key consideration during deferment. If the accrued interest is not paid during the deferment period, it may be capitalized, meaning it is added to the loan’s principal balance at the end of the deferment. This increases the principal, leading to a higher balance for future interest calculations and increasing the loan’s total cost. Borrowers can make interest-only payments during deferment to prevent capitalization and mitigate balance increases.

Repayment After Deferment

Once the deferment period concludes, repayment of the Parent PLUS loan is scheduled to resume. There is no separate grace period after deferment ends; repayment begins immediately, including after the six-month post-enrollment deferment. The loan servicer is responsible for notifying the borrower before payments restart, providing details about the upcoming payment schedule.

Parent PLUS loan borrowers have various repayment plan options available to manage their debt once deferment ends. These commonly include the Standard Repayment Plan, the Graduated Repayment Plan, and the Extended Repayment Plan. For additional flexibility, Parent PLUS loans can become eligible for the Income-Contingent Repayment (ICR) plan if they are first consolidated into a Direct Consolidation Loan. Borrowers should contact their loan servicer to discuss these options and determine the most suitable plan for their financial situation.