<p>I am utterly confused about how Federal PLUS loans work. I understand that the have a fixed interest rate of 7.9%, but the repayment bit confuses me. </p>
<p>I am a 2011 high school student and I received a financial aid offer of $5,500 in an unsubsidized loan and $53,894 in a federal PLUS loan for the 2012 school year (Fall 2011 + Spring 2012) from NYU. If I were to accept this offer, how would repayment work?</p>
<p>My specific question is: do the loans stack? I understand that you get a new loan for every year, so does that mean that my parents will essentially have taken out four $55K loans and have to make the monthly payments on the principle + interest/fees for every single loan at once? Or will they be paying for the principle + interest/fees for each $55K loan at a time? If it's the former, is there a way to consolidate the loans without having astronomical payments?</p>
<p>Sorry if any of the questions I've asked are obvious, but I've spent the past two hours or so looking for information and I'm still confused.</p>
<p>Thanks.</p>
<p>How on earth can you consider having your parents take out $220,000 in loans? For NYU?</p>
<p>Your total loan load for undergrad should be no more than about $30,000 total for 4 years. </p>
<p>You need to find a school you can afford. Now.</p>
<p>So I’m guessing that means that the loans actually are 4 separate loans that each require payment with interest?</p>
<p>The plus loans are for your parents. Your parents do not have to take the full amount. Each year your FA award will be packaged pretty similar year to year. They can elect to defer repayment of the loan as long as you are at least 1/2 time in school.meaning that each year they take a parent plus loan, it can be deferred til after you graduate. They can pay interest only if they want while you are in school. They can pay any of it while you are in school. But remember, the interest get compounded and added to the loan. It is very flexible. But there are options to defer it. BTW, are your parents ok taking this much in loans?</p>
<p>Yes, your aid package is aid for one year. Unless your parents are quite wealthy and can afford to take out $220,000 in loans this is a huge debt for them to take on. HUGE. </p>
<p>The payments on a $220,000 loan at 7.9% would be in the region of $2600 a month every month for 10 years. Around $1900 a month if they paid it off over 20 years. And that is assuming they are paying the interest while you are in college. If not then the debt (just on the PLUS loan) will have grown to over $260,000 by the time you graduate and they would face payments of over $3000 a month for 10 years, or @$2200 a month over 20 years.</p>
<p>Ok thanks for clearing this up. NYU is almost definitely out of the running now.</p>