Parent PLUS Loan repayment timeline and credit impact - confused about responsibility

I've been through this with two kids now. For Parent PLUS loans, the repayment typically starts within 60 days after the loan is fully disbursed (so usually within 2 months after the start of the term), UNLESS you specifically request a deferment while your student is enrolled. The deferment option isn't automatic - you have to ask for it when applying or contact your loan servicer. Without deferment, you'll be making payments while your student is still in school. As for payoff timeline, the standard repayment plan is 10 years, but there are extended plans that go up to 25 years if needed. Just remember the longer you stretch it, the more interest you pay overall. Regarding credit impact - the PLUS loan will show up on your credit report as a large installment loan. It doesn't necessarily hurt your score if you make payments on time, but it does increase your debt-to-income ratio which could affect future loans/mortgages you might need. With a 720 score, you should be fine for approval though!

we got a pluss loan for my son 2 yrs ago and our payments started right away!! no one told us that would happen, big shock when the first bill came. we thought it would wait till he graduated but NOPE. had to call and ask for deferment after we already got the first bill

FYI on the credit report issue - the PLUS loan shows up immediately after approval, even before disbursement. It hit my credit report and dropped my score by about 15 points temporarily because of the new debt. But after a few months of on-time payments, my score actually went back up higher than before because it improved my credit mix (I mostly just had credit cards before). The bigger impact isn't really on your credit score but on your debt-to-income ratio if you're applying for other loans. When we tried to refinance our house, the lender counted the full PLUS loan amount in our obligations even though we were on deferment at the time. One thing nobody warned me about: if you request deferment, interest STILL ACCRUES during that time. By the time my son graduated, the $45,000 we borrowed had grown to nearly $58,000 because of the interest that built up during those four years. Wish I had made at least interest-only payments during school.

I HATE PARENT PLUS LOANS!!! They are a TRAP for parents!!! My daughter dropped out after sophomore year and I'm STUCK with $37,000 in debt that I can't get rid of! And they don't qualify for most forgiveness programs since they're parent loans not student loans. THINK VERY CAREFULLY before signing up for these! The government makes them sound great but they're a nightmare if anything goes wrong!!!!!

One thing that hasn't been mentioned yet - if you're struggling to reach someone at Federal Student Aid to discuss PLUS loan options or to request deferment, I highly recommend using Claimyr. I spent days trying to get through on the regular FSA phone lines with no luck (always disconnected or 2+ hour waits). Claimyr got me connected to an actual person in about 15 minutes. They have a short video demo at https://youtu.be/TbC8dZQWYNQ that shows how it works. Saved me so much frustration when I needed to discuss repayment options for my daughter's PLUS loans.

Have you considered having your daughter take out additional Direct Unsubsidized loans instead? Sometimes that's better than parents taking PLUS loans. Undergraduate students can borrow up to $12,500 per year in Direct loans depending on their year in school. Those have better repayment options after graduation including income-based plans.

my sister took out parent plus loans for my niece and shes been paying on them for like 15 years now... just never ends! they started at like 40k and shes paid back almost 60k already and still owes like 25k more! the interest is killer

One more thing about the credit impact - PLUS loans require a credit check, but it's very basic. They're mainly looking for "adverse credit history" like delinquencies, bankruptcies, foreclosures, etc. within the past 5 years. With a 720 score, you'll easily pass unless you have a specific negative event in your recent history. The interest rate for 2023-2024 PLUS loans is 8.05%, which is pretty high compared to other federal student loans. It's fixed for the life of the loan though. All PLUS loans also have an origination fee (around 4.2% currently) that gets deducted from the disbursement amount - so if you request $21,000, you'll only receive about $20,118 toward tuition, but you'll owe back the full $21,000 plus interest. If you do decide to go with the PLUS loan, I strongly recommend at least making interest payments during school, even during deferment. Otherwise that interest capitalizes and you end up paying interest on interest.

To answer your question about requesting deferment during the online application - yes, there should be a question during the application process asking about deferment. Make sure you select that you want to defer payments while your student is enrolled at least half-time. If you miss that option during application, you can still request deferment later by contacting your loan servicer, but it's easier to do it upfront. Keep in mind that even with deferment, you can always make voluntary payments to reduce the balance or cover accruing interest. Another thing to consider is that you can apply for PLUS loans one year at a time, rather than committing to all four years at once. This gives you flexibility to reassess each year based on your financial situation and your daughter's other aid options. Many parents don't realize this is an option.

My daughter is a junior now, and we've used PLUS loans for three years. One strategy that's worked for us: we took out the PLUS loan but immediately paid back a portion we didn't need. Since there's no prepayment penalty, this reduced the principal right away without affecting the financial aid package. The school required us to accept/reject aid in specific increments, but we had more flexibility after disbursement. Also, check if your daughter's school has a payment plan option! Ours lets us spread tuition payments over 10 months for a small fee ($45/semester). We use that for a portion and the PLUS loan for the rest, which reduced how much we needed to borrow.

Just wanted to add another perspective as someone who's been through this process. One thing I learned too late is that you can actually request a specific disbursement schedule for PLUS loans. Instead of taking the full annual amount at once, you can ask for it to be split between semesters or even smaller chunks throughout the year. This helped us manage cash flow better and reduced the total interest since we weren't borrowing money months before we actually needed it. Also, regarding the credit impact - I found it helpful to monitor my credit report closely after taking out the PLUS loan. The initial hit to my score was temporary, but I noticed it affected my credit utilization calculations in ways I didn't expect. If you have any major purchases planned (car, home refinance, etc.), you might want to time those before applying for the PLUS loan if possible. One last tip: keep detailed records of all your PLUS loan communications and payments. The loan servicers can change, and I've heard horror stories of people having to prove payment history when loans get transferred. Good luck with your decision!

As someone who just went through this decision last year, I wanted to share what I wish I'd known upfront. The biggest surprise for us was how the loan servicer assignment works - you don't get to choose who services your PLUS loan, and different servicers have very different customer service experiences. We ended up with FedLoan and their online portal was pretty user-friendly, but I've heard horror stories about others. One practical tip: if you do move forward with the PLUS loan, set up automatic payments immediately. Most servicers offer a 0.25% interest rate reduction for autopay, which might seem small but adds up over time. Also, that autopay ensures you never accidentally miss a payment, which would hurt your credit score. Regarding the timeline question - we chose to make interest-only payments during school rather than full deferment. Our payment was only about $140/month for a $20k loan, which was much more manageable than letting it all capitalize. When our daughter graduates, we'll already be in a payment routine and won't face that sticker shock of suddenly owing thousands more than we borrowed. The credit impact was actually less than I feared - yes, it shows up as debt, but consistent payments helped our credit mix. Just be prepared for that initial dip when the loan first appears on your report.

As a newcomer to this whole PLUS loan situation, I'm finding this thread incredibly eye-opening! My son is only a high school junior, but we're already starting to stress about college financing. Reading everyone's experiences here is making me realize I need to start preparing NOW rather than waiting until he's accepted somewhere. A few questions based on what I'm reading: Is there a way to estimate what the monthly interest-only payments would be before applying? And for those who've been through this - would you recommend building up savings specifically for these payments during the high school years, or is that not realistic for most families? Also, I'm seeing mentions of income-contingent repayment plans for PLUS loans - can someone explain how those work compared to the standard 10-year plan? With all the horror stories about payments lasting decades, I want to understand all the options before we get into this situation. Thanks to everyone sharing their real experiences - this is exactly the kind of honest information that's so hard to find elsewhere!

As someone who went through this exact situation two years ago, I wanted to add a few practical tips that really helped us navigate the PLUS loan process. First, definitely request the deferment during the application - it's a checkbox that's easy to miss but saves you from that surprise first bill that others mentioned. One thing I wish I'd known earlier: you can actually make payments directly toward the principal even during deferment, not just interest-only payments. We started with interest-only ($142/month on our $21K loan) but whenever we had extra money - tax refund, bonus, etc. - we'd throw it at the principal. This strategy helped us avoid most of that compound interest trap. Also, regarding the credit impact - the loan does show up immediately, but I found that setting up autopay right away actually helped my credit score long-term. The consistent payment history offset the initial debt increase, and my score was actually higher after 18 months than before I took the loan. One last tip: keep screenshots of your online application, especially the deferment election. When our loan got transferred to a new servicer, they initially said we hadn't requested deferment and tried to make us pay penalties. Having that documentation saved us hundreds in fees.

This thread has been incredibly helpful! I'm in almost the exact same situation as Oliver - my daughter just got accepted and we're looking at about the same loan amount. After reading everyone's experiences, I think I have a much clearer picture of what we're getting into. A couple of follow-up questions: For those who chose the interest-only payment route during school, did you find it difficult to transition to full payments after graduation? I'm wondering if there's a payment shock when the principal payments kick in. Also, has anyone had success negotiating with their loan servicer for better terms, or are the federal loan terms pretty much set in stone? One thing I'm taking away from all this is that PLUS loans really require active management - they're not something you can just "set and forget." Thanks to everyone for sharing your real-world experiences. This is exactly the kind of practical information that's missing from the official financial aid websites!