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Parent PLUS Loans are taken out in the name of the parent or legal guardian of the student. This means that they cannot be consolidated with loans taken out in the student's name, since all loans must be associated with the same Social Security Number. This can sometimes discourage people from applying for these types of loans, but do not let it.
For those parents who have multiple PLUS Loans, have no fear. You can still consolidate, just not with loans in the student's name. In fact, you will automatically get a .25 percent rate reduction on your consolidation loan. All PLUS Loans disbursed after July 1, 2006 have a fixed 8.5 percent interest rate. However, new federal consolidation loans have been capped at 8.25 percent. So by rolling all of your loans into one, you not only reduce your monthly payment, but you also reduce the interest rate too.
Another added benefit of the Parent PLUS Loan is that you do not have to wait until your child graduates to consolidate. You can do so at any point in time after the final loan disbursement has been made for the academic year. Consolidating PLUS Loans is really a no-brainer.
|Jennifer Mathes, Ph.D.|