<p>great read, very helpful.</p>
<p>When you take out a PLUS loan there are several repayment options. One is to pay it back after the 2nd half of the the loan is disbursed. Another is to begin paying it back 6 months after graduation. I have an agreement with my son that he beging paying back the loan once he graduates from college. In the meantime I am paying all the accruing interest charges on a monthy basis. If he cannot pay the loan back six months after graduation, I will make payments until he can. As far as paying back ahead of time , all you have do do is set up your bank account and routing number on their website and you can pay back as much as you want, whenever you want, you don’t have to wait until six months after graduation. In addition, with these loans if the parent borrower or the student dies(god forbid), these loans are forgiven. There are no such provisions on private loans.</p>
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<p>True, and while a personal benefit, which is actuarially small, the taxpayers pick up the tab.</p>
<p>While I do believe in personal responsibility, and I consider myself a financially informed/educated person, I feel that the government isn’t doing any favors when it puts up a program that can be, for some parents, a financial trap. </p>
<p>After health care, college is probably the second itemized expense for which most families will have a “do what you need to, think of the expenses later”. And college admission offices know that, and sometimes they push parents to take these loans.</p>
<p>UpperValley–no two ways about it, colleges/universities are committed to perpetuate these PLUS loans, the lure of easy money now, but they (hah) don’t tell the parents about the hard payback later. It keeps them in business, and at the information sessions on college tours you will see as savvy as slickster as you’ll ever see in the business world. However, that doesn’t mean we have to fall for it, much like a 2-hour pitch for a timeshare, except you don’t get a 24" hibachi instead of a gas grill as promised (yes, that happened to me way back when! 
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<p>borghugh–agreed that payback methods on PLUS loans are ultra-flexible, to defer if need be OR to set up advance payments earmarked as ‘principal only’. Haven’t had the funds to take advantage of THAT yet, hope to once youngest is finished.</p>
<p>I just can’t wrap my head around all the blame that goes to colleges-- don’t families have responsibilities to understand their options and the charges? The stuff is all over the web. The repayment schedules/costs are there.<br>
Doesn’t the problem really start with families that will go into hock for college- and do so blindly?<br>
I like the earlier suggestion that there be real loan counseling as part of the app for them- something where parents have to look up their charges and project the costs over the four years. Etc.</p>
<p>@lookingforward: I agree with you that information is readily available, but some families are just not well-informed enough. I think that, to some (though not all) extent, colleges pushing parents into PLUS loans are like certain doctors pushing patients to buy equally effective but much more expensive branded drugs with their credit cards, knowing it will bankrupt them.</p>
<p>A major beef I do have about PLUS is the way a lot of colleges package them. They are often presented as financial aid. That is misleading. I have seen award letters where it looks like the college met full need for a family by tucking the PLUS in there. It is particularly distressing because there is no guarantee and considerable doubt that a parent can qualify for PLUS and since the recommended time to apply for it is a certain period before the semester (in fact you can’t apply right away, I believe), I have seen parents who are counting on it get declined after their kid has long made the school choice and other options are gone. Not nice at all. </p>
<p>There is also a point when a program is clearly a problem if more families are getting into trouble from it than getting advantages. If the default rate is high, and the program is costing more than expected to run, then something should be done. As stated earlier, I, personally don’t know where we are with this particular program. The program came to be due to tremendous failures and costs in getting students who took out more loans than they could handle for college, in their own names. By involving the parents, part of the rationale is that parents are more responsible, experienced and settled adults regarding finances. At age 18, to expect a new adult to make this kind of decision for large debt for college, resulted in a lot of defaults and painful chasing down of those who did not pay back their loans. That was my generation of students. I still remember a number of my classmates who “defaulted” on their student loans, and the government trying to chase them down and collect for decades thereafter. They may still be trying to collect, for all I know. That is why federal loans ae limited for students. </p>
<p>But though we can say all that we want how responsible people should be, they often want. When too many people default or get into trouble with something, whether it is their own fault or not, it can affect others uninvolved adversely. That is why intervention is often advocated for home foreclosures. Though the folks defaulting on the mortgage are fully to blame for taking on what they could not handle, when too many in a nieghborhood do that, it can sink a community. When the pain of meeting ones’ obligations become far more painful than walkng away, it’s pretty clear what the majority reaction will be. </p>
<p>So the Parent loans may not be something out there for long. They are there right now, however, and something to consider.</p>