So to be clear, you can certainly refinance the Parent PLUS loans your parents took out for you in your own name. It's a little roundabout, first you refinnance them to private as a cosigner with your parents, then you need to refinance a second time taking your parents off the loan entirely.
The Bottom Line. So, can Parent PLUS loans be transferred to a student? It is possible… if you refinance your Parent PLUS loan to your child. They'll then take over responsibility for their educational debt, and it could help them build credit.
As with loans made to students, a parent PLUS loan can be discharged if you die, if you (not the student on whose behalf you obtained the loan) become totally and permanently disabled, or if your loan is discharged in bankruptcy. Your parent PLUS loan may also be discharged if the child for whom you borrowed dies.
It doesn't matter how many consecutive on-time payments have been made, whether the primary borrower has good credit, stable income, and a low debt-to-income ratio. A cosigner or endorser can be released from a Parent PLUS Loan only if the loan balance is paid in full.
The Bottom Line. Yes, borrowers with Parent PLUS Loans can have their debts forgiven after 10 years (or 120 eligible monthly payments) with the PSLF program.
The borrower needs to close the account; otherwise, they could simply run up another balance, which you'll be liable for, too. Getting out of a co-signed loan will likely take effort, money and some cajoling of the original borrower.
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.
Defaulting on a Parent PLUS Loan can lead to serious consequences, including wage garnishment, credit score damage, and the loss of federal benefits. But you can recover through loan rehabilitation or consolidation with the U.S. Department of Education.
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.
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.
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.
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.
If you are unable to obtain a parent PLUS loan, your child may be eligible for additional unsubsidized loans. Your child should contact the school's financial aid office for more information.
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.
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.
Key Takeaways. 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.
The $100,000 Loophole.
With a larger below-market loan, the $100,000 loophole can save you from unwanted tax results. To qualify for this loophole, all outstanding loans between you and the borrower must aggregate to $100,000 or less.
If you'd like to take legal responsibility for the parent PLUS loans, you'll need to refinance them through a private lender, such as a bank or credit union. You'll have to meet credit score and income requirements to qualify.
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.
Fortunately, you can have your name removed, but you will have to take the appropriate steps depending on the cosigned loan type. Basically, you have two options: You can enable the main borrower to assume total control of the debt or you can get rid of the debt entirely.
Request release from a co-signed loan
Co-signers can make a written request to the lender to be released from a loan. In certain cases, like some student loans, there may be a provision that allows a co-signer to take their name off a loan.
Complete the required paperwork: If the lender offers a release option, you will typically need to complete paperwork that eliminates the co-signer from the loan and makes you the primary borrower responsible for the repayment of the loan. Only the primary borrower is allowed to make this change on the loan.