Parent PLUS loans are wildly misunderstood. There is a lot of misinformation out there which leads to a lot of people not knowing some of these basic things about Parent PLUS loans.
1. They don’t automatically go into deferment/forbearance
Many parents want to make payments on their loans as a result they will go straight into repayment after the final disbursement. However if you want to place the loans into a deferment based on the student’s enrollment, you are able to request that.
2. They cannot be transferred
Even more people are under the belief that after the student is out of school that these loans can be transferred to the students name. These loans are loans taken by the parent and cannot be moved to any other party.
3. Deferments/forbearances are based on the borrowers information, not students
Because the parents are the borrower, all deferments, forbearances and lower payment plans are based on their information. As a result, for example, if the student is collecting unemployment but the parent is employed more than 30 hours, they would not qualify for an Unemployment Deferment.
4. They cannot be based on Income unless part of a consolidation
Parent PLUS loans are not eligible for Income Driven Repayment plans. The one exception is if they are consolidated then the borrower would become eligible for the Income Contingent Repayment plan. Please be aware if consolidated they are no longer officially Parent PLUS loans anymore so they can no longer be placed into deferment based on student enrollment.