In the FFEL Program, funds are made available to student and parent borrowers through private lenders while schools who have elected to participate in the Clinton Administration's Direct Loan program receive their funds directly from their school, similar to other federal aid programs such as the Pell Grant. There has been great debate about the differences between the two loan programs and the competition between the government and the private lenders has benefited the student and parent borrowers with better service and special financial incentives. It is likely that these differences will be addressed during the next Reauthorization of the Higher Education Act, which will occur during the next year. For example, if the student attends a semester term school and the spring semester begins January 5, the first payment would be on or before March 15 of the same year. However, interest on the PLUS loan begins on the date the loan is first disbursed.
Parents have up to ten years to repay the loan.
There is no pre-payment penalty for the PLUS or any of the federal educational loans. Contact your college financial aid administrator for more details about the PLUS loan and their application procedures. Calculating Monthly Payments To determine exact monthly payment amounts on all types of educational loans, go to one of several sites with loan repayment calculators such as Sallie Mae , USA Group , or the FinAid Information Page . Copyright 1997 - 2000 by Student Financial Aid Services. All rights reserved.