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| What To Do With PLUS Loans When Consolidating Student Debt |
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| It has been noticed by our consolidation program agents that most students and student’s parents don’t know what to do with PLUS loans when they are thinking about debt consolidation. Consolidating student debt is not a simple process but it isn’t complex either. Sometimes PLUS loans can be included in a debt consolidation program and sometimes they need to be consolidated separately. |
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| What to do with PLUS loans will depend on a particular factor. Plus loans are taken by parents who want to help their children to pay for college. Thus, the borrower is not the actual student but the parent who is obliged to repay the loan complying with the terms stipulated in the loan contract. This implies that commonly the borrower of a PLUS loan differs from the borrower of the rest of the student debt loans. |
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Combined Consolidation Of Student Loans And Plus Loans
As explained above the holder of a PLUS loan is not the student but the parent and thus combined consolidation is not easy as the ones obliged to repaying the different loan types are two separate people. Joint consolidation implies then that one of them will assume the other’s debt. Unless another loan is taken in order to achieve this, the consent of the lender must be gained to successfully consolidate both debts. |
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| Usually, once the student joins the workforce, he obtains a student loan for graduates and with the money obtained repays both regular student debt and PLUS loans too, thus providing parents with debt relief from the weight of PLUS loans. Nevertheless, nothing prevents parents from taking charge of their children debt and consolidate PLUS loans jointly with their children student debt. |
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The Most Common Scenario
The most common scenario however, is a separate consolidation process for student debt and parents debt (PLUS loans). Student debt and especially federal loans need to be consolidated separately because the interest rates are particularly low due to the subsidy. Besides, the fact that the holders are two different people contributes to making this solution the simplest one. |
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| Parents can consolidate Plus loans along with personal debt like consumer debt (credit card and store card debt, personal loan debt, etc.). Student Federal Loans can be consolidated through federal consolidation and the rates can be locked at low figures. Private student debt can be consolidated through private student consolidation loans or with regular debt consolidation programs from a debt consolidation agency. In this case, personal debt and consumer debt can be included in the process to obtain a single monthly payment with lower installments. |
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| Consolidation Scenario |
Debt Holders |
New Debt Holder |
| Combined Consolidation |
Student Debt: Student
Plus Loans: Parents |
Either The Student Or The Parents |
| Separate Consolidation |
Student Debt: Student
Plus Loans: Parents
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Unmodified |
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