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.
In addition to the lack of practical discharge in bankruptcy, and the lack of income-based repayment programs, the other big problem with Parent Plus loans is that no one is looking at your ability to repay the loan when the loan is made.
Parent PLUS loans are educational loans, and the borrower can get an income tax deduction. When borrowers review their tax deductions, they can deduct up to $2,500 per year in interest paid on the Parent PLUS loan.
Direct PLUS Loans for Parents
If there is money left over, the school will pay it to you. In some cases, with your permission, the school may give the leftover money to your child.
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.
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.
If a borrower dies, their federal student loans are discharged after the required proof of death is submitted. The borrower's family is not responsible for repaying the loans. A parent PLUS loan is discharged if the parent dies or if the student on whose behalf a parent obtained the loan dies.
The student loan tax offset program resumed in 2024. If you have federal student loans in default, your 2025 tax refund may be at risk.
Many parents struggling to repay student loan debt can qualify for loan forgiveness. A federal parent PLUS loan may be eligible for forgiveness through an income-contingent repayment plan or the Public Service Loan Forgiveness (PSLF) program. There are also options for parents that take out loans from private lenders.
Unlike all other federal student loans, there are no explicit borrowing limits for parent PLUS loans. Parents may borrow up to the full cost of attendance, which is determined by the institution, not the government, and includes books, travel and living expenses. There are no ability-to-repay standards for PLUS loans.
Refinancing. If you have good credit and enough household income to qualify, you may also be able to refinance your Parent PLUS loan to a lower interest rate through a private lender, which can potentially save you money.
Your Last Resort: Private Loans
These loans have different repayment options than federal loans and will most likely cost you more in interest. Also, they may not have the same kinds of protections in case of disability or death as do the federal loans. Private loans generally should be taken out only as a last resort.
How to Use the Double Consolidation Loophole: The key to using the double consolidation loophole is to consolidate each of your Parent PLUS Loans twice. In this scenario, a borrower can have as few as two Parent PLUS Loans.
Yes, borrowers with Parent PLUS Loans can have their debts forgiven after 10 years (or 120 eligible monthly payments) with the PSLF program.
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.
Usually only the state and federal governments are able to take your tax refund, therefore you'll probably get your refund if your student loan debt isn't: With the state or federal government. Part of a federally insured student loan program.
Your tax refund may be bigger this year due to inflation-related changes to the standard deductions and tax brackets for 2024. These adjustments could translate to a bigger tax refund compared to 2023 if your income, withholding, filing status and tax credits stay the same.
Why did my college send me a check? A refund check is money that is directly deposited to you by your college. It is the excess money left over from your financial aid award after your tuition and additional fees have been paid. Your college may send you a check or the money may be deposited into your checking account.
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.
Co-signed loans are generally the only kind of debt parents may be left with when a child dies. These may include student loans, car loans, or other personal loans. If the child was the primary borrower and they pass away, the co-signing parent may be required to repay the loan.
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.
Requesting an increase or decrease
Login at studentaid.gov with your FSA ID. You will then request a change in a PLUS loan amount by indicating a new total loan amount.
If approved, the student can pay off the Parent PLUS loan with their new loan and begin making payments on the new loan. Transferring a Parent PLUS loan to a student involves refinancing through a private lender. The student must apply for a new loan to pay off the Parent PLUS loan.