Parent PLUS loans can be eligible for Income-Contingent Repayment (ICR) and Public Service Loan Forgiveness (PSLF). However, they must be consolidated into a federal Direct Consolidation loan first. Your eligibility for these programs can depend on your income and the type of employer you work for.
Out of all the income-driven repayment plans, Parent PLUS loans only qualify for the Income-Contingent Repayment (ICR) plan. Enrolling in ICR requires you to consolidate your Parent PLUS loans. Once you're on ICR, you can pursue Public Service Loan Forgiveness.
Generally, you'll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. Your required monthly payment amount will vary depending on how much you borrowed, the interest rates on your loans, and your repayment plan. Choose a repayment plan that best meets your needs.
The Double Consolidation Loophole for Parent PLUS Loans is a strategy that reduces your monthly payments through better income-driven repayment plans (such as PAYE, IBR, or SAVE) achieved by consolidating your loans twice.
What Are Some Reasons to Avoid PLUS Loans? First, PLUS loans have no automatic grace period. Then there's the fact they aren't eligible for most IDR plans. Then, borrowing too much is easy to do, and finally, they're nearly impossible to get out of, even in bankruptcy.
Can the loan be transferred to the student? No, a Direct PLUS Loan made to a parent cannot be transferred to the child. You, the parent borrower, are legally responsible for repaying the loan.
Parent PLUS loans can potentially be forgiven after 10 years under specific conditions, such as through the Public Service Loan Forgiveness (PSLF) program after consolidation into a direct consolidation loan. Parent borrowers must enroll in the Income-Contingent Repayment (ICR) plan to qualify for PSLF.
If you're a parent or graduate student seeking a Direct PLUS Loan, one of the requirements to qualify is that you must not have an adverse credit history. If your application is denied because of an adverse credit history, don't give up. You still have options.
The Education Department doesn't forgive loan balances for parents when they retire. It will keep sending bills and adding interest until you pay off the debt, die or become totally and permanently disabled, or qualify for one of the department's student loan forgiveness programs.
If you're struggling to make your Parent PLUS Loan payments, you can explore temporary relief options like deferment or forbearance. Both of these provide short-term solutions but can lead to a higher loan balance as interest continues to grow.
Based on the information from Federal Student Aid, as of 2022, the average Parent PLUS Loan debt is $29,528. Although that might not sound like a huge amount, it depends on the parent's income.
Parent borrowers can become eligible for one of the IDR Plans by consolidating their Parent PLUS Loans into a Direct Consolidation Loan. In doing so, they can enroll in the Income-Contingent Repayment (ICR) plan.
Your parent's PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.
PLUS loans for parents and graduate or professional students aren't eligible for this type of forgiveness. Federal Perkins Loans aren't eligible for this type of forgiveness. However, the Perkins Loan program has a cancellation option for teachers and discharge programs for other specified workers and volunteers.
This repayment plan leads to loan forgiveness after 25 years under normal conditions, but borrowers pursuing PSLF could have remaining debt forgiven after 10 years (if you still have a balance left).
Your parent PLUS loan may be discharged if you (not the child) become totally and permanently disabled, die, or (in some cases) file for bankruptcy. Your parent PLUS loan also may be discharged if the student for whom you borrowed dies.
Standard repayment plan: Pay off your loan by making fixed monthly payments for 10 years. Graduated repayment plan: Start with smaller payments, then have your payments gradually increase during the 10-year repayment period. Extended repayment plan: Fixed or graduated payments for 25 years.
Can more than one parent borrow a PLUS Loan? If a student's parents are divorced, both the custodial and non-custodial parent may borrow a PLUS Loan for their dependent, undergraduate student.
A refund is issued to the parent-borrower 7-10 days after the loan has been disbursed to the student's account. The parent-borrow may elect to receive their refund via Digital Disbursement via Zelle or by Paper check. The default refund method will be via paper check.
While your parent PLUS loans are in default, the government can garnish your wages and take your tax refunds and Social Security checks, among other consequences. Defaulted loans also aren't eligible for different repayment plans, or deferment or forbearance.
Steps for how to transfer a Parent PLUS loan to your child:
Your child must apply for a student loan refinance in their own name. The application is based on your child's information alone. This is why it's important to ensure they have a steady income and meet the lender's criteria.
Parent PLUS Loans are eligible for total and permanent disability discharge if the parent borrower, not the student for whom you borrowed, is totally and permanently disabled. For more information on TPD eligibility: https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge.