<p>
PLUS loan is 7.9% a year. (direct student loans are 6.8)</p>
<p>
Well the college is not really extending the loan to you. The loan is a govt loan. The college lists the option to you as one way to pay for school. How or if you are able to repay the loan does not concern them. Once they have their money, your ability or inability to repay the loan does not affect them at all. They do not take this into consideration - we often see very low income 0 EFC students at certain schools (cough NYU cough) being offered $30-40k a year in parent PLUS loans. The school does not care at all that a parent with a low enough income to qualify for 0 EFC is highly unlikely to be able to repay such a loan.</p>
<p>My understanding is that PLUS repayment can be deferred, though of course the interest will be accruing and capitalizing all that time.</p>