The remaining two years of 6.8% loans would carry that fixed rate, and must be repaid in 10 years, because they are unconsolidated.
Fine Print for Parents
Walker came up with an interesting twist for parents with PLUS loans: many don't realize that those can be consolidated. That might be an attractive option for the older, variable-rate PLUS loans, especially if you think inflation might drive interest rates higher in future years.
The consolidation formula is similar to that for Stafford Loans. The new 5.01% variable rate is rounded up to 5.125% -- not a bad rate to lock in. But you have until next year at this time to make that decision, so there's no rush.
Why would you consolidate the fixed-rate 8.5% PLUS loans that parents of grads have taken out in the past two years? Walker points out that PLUS loans have a maximum consolidation rate of 8.25%. So you might want to consolidate them separately through the Department of Education, to shave one-quarter of one percent off your repayment rate.
It's a very complicated, even tricky, business to deal with student loans. And that's The Savage Truth!
