My child is still in school. Why is there a payment?

This is an issue I see come up quite often at work.  A Parent calls in after receiving a bill for his or her Parent PLUS loan.  They tell us that their child is still in school and wants to know why they are receiving this bill.

Parent PLUS loans are a completely different animal.  They often times tend to not follow the rules of a regular stafford loan.  This is one of those times.

PLUS loans instantly enter repayment as soon as the final disbursement is sent.  If the borrower (in this case the parent) is in school and the school updates they go instantly into Deferment.  This is why Graduate PLUS loans never notice the fact they go into repayment.  However if the student is not in school (which is typical for parents), the loan will.

This is beneficial for many parents as they prefer to make payments in school.  It is especially beneficial since these loans have the highest interest rates of any government backed loans.

However if you can’t or don’t want to make the payments you do have options.  Just apply for a Parent PLUS In-School Deferment.  This will keep the account current until the student withdraws, graduates, or is no longer attending as at least a half-time student.

Two quick final notes about this deferment.

1) During your application for a Parent PLUS loan, you can request to have a deferment instantly placed.  This often times doesn’t work though so make sure and follow up.

2) Just because one loan is deferred don’t assume the other ones automatically are.  You have to request this deferment for each loan.