<p>Hey, I have used the search feature and everything to look around on this board to answer this question, maybe it's silly that I still have not been able to figure it out, but it's a simple one.</p>
<p>With Parent PLUS loans, or with any other loans that you guys know of (PLUS was just what I was offered), is there anyway to avoid paying the interest rate by paying for tuition in a large lump sum at the end of the four years? My mom is asking this question because she would rather pay it off all at once, rather than gradually pay for college year by year. We are financially stable and don't need loans, but were offered it by my financial aid.</p>
<p>No, I don’t believe so. If you pay the interest each month while you are in school, you can pay one lump sum for the principal amount. But if you defer the payments until you graduate, the interest will accrue and when you go to pay it back as a lump sum at the end of the four years, it will include the principal and interest accrued for the four years. No way to avoid that.</p>
<p>Kleibo is correct - the PLUS is not a subsidized loan (like the Perkins or the subsidized Stafford) so the interest on it starts accruing on the day the loan is disbursed to you. If the interest is not paid as you go along then it is capitalized, meaning it is added to the loan amount and you pay interest on the interest. The PLUS loan interest is not that good (@8.5% ) and there are fees of up to 4% that are deducted from the loan when it is issued (for instance if you borrow $10,000 you may actually only receive $9600 after the fee is deducted. For Stafford loans some lenders waive or reduce the fees - I don’t know if this is the case with PLUS loans). If you really don’t need them and the money is available from other sources then there is probably no real advantage in taking them, though that is something your parents would have to figure out. (though the interest may be tax deductible if other criteria, such as income limits, are met).</p>