No, you cannot directly transfer a federal Parent PLUS loan to your child; the parent borrower remains legally responsible, but you can achieve a similar outcome by having the child refinance the debt through a private lender, where the child applies for a new loan in their name to pay off the Parent PLUS loan, making them responsible for repayment if approved. This process requires the child to qualify with good credit and income, and it's irreversible.
Summary: Transferring Parent PLUS loans into the student's name isn't possible with a Direct Consolidation Loan, but it can be accomplished by refinancing through a private student loan refinance lender.
However, Parent PLUS Loans will be capped at $20,000 per student per year and a $65,000 lifetime limit beginning July 1, 2026. Parents who borrowed before that date can continue borrowing under the current limits for up to three additional years or until their student completes their program. Good news.
The government doesn't forgive Parent PLUS Loans when you retire or draw Social Security benefits, but it has programs that will wipe out your remaining balance after you've made a number of student loan payments under an income-driven repayment plan.
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. Once refinanced, the student becomes responsible for the new loan's repayments. Refinancing can potentially lower the interest rate and monthly payments.
Yes, Parent PLUS loans can be forgiven or discharged, but it's more complex than other federal loans, requiring consolidation into a Direct Loan for Income-Driven Repayment (IDR) or Public Service Loan Forgiveness (PSLF) after 10 years, or immediate discharge for death/total disability of the parent or student, plus other limited options like bankruptcy or closed school.
Defaulting on a Parent PLUS Loan can have serious financial consequences for student loan borrowers. Here's what happens if you haven't made a payment in more than 270 days: Immediate Consequences: Credit Score Impact: Your default will be reported to credit bureaus, which can significantly lower your credit score.
As a parent PLUS borrower, can I transfer responsibility for repaying the loan to my child? No, a Direct PLUS Loan made to a parent cannot be transferred to the child.
The "7-year rule" for student loans generally refers to when negative marks, like defaults, are removed from your credit report (around 7 years after the first missed payment or default date for federal loans, 7.5 years for private loans), but the debt itself doesn't disappear and must be paid off; it's also a benchmark in bankruptcy proceedings where federal loans can become dischargeable after 7 years from when payments were due, though proving "undue hardship" is required and difficult.
Parent PLUS loans are not eligible for any of the income-driven repayment (IDR) plans in and of themselves. You can, however, consolidate the Parent PLUS loans to a Direct Consolidation Loan at which point the borrower gains access to one of the IDR plans, but only one – the income contingent repayment plan (ICR).
By taking action now, you can make your Parent PLUS loans eligible for an Income-Driven Repayment (IDR) plan, which sets payments as a portion of your income each year and offers many people lower payments compared to the Standard Repayment plan.
Can the Loan Be Put into the Student's Name? This is one of the most common questions — and the answer is, yes, but only through private refinancing. The federal system does not allow Parent PLUS loans to be “transferred” to the student directly.
How Can Parent PLUS Loans Be Discharged?
The law also sets new caps on the federal loans parents can borrow to pay for their child's undergraduate education, also known as Parent PLUS loans. Effective July 1, 2026, new parent borrowers will be prohibited from borrowing more than $20,000 per year and $65,000 total per child.
Unlike student loans, parents are fully responsible for repaying PLUS loans, often without an automatic grace period and with limited income-driven repayment options. High borrowing limits can encourage over-borrowing, sometimes without careful consideration of long-term debt-to-income ratios.
Student loan borrowers can't directly take over their parents' Parent Plus Loans from the federal government as it isn't in the students' names. However, there may be options available if you're considering student loan refinancing through a private lender.
You will lose repayment plan options and restart the clock on PSLF and other forgiveness programs. You can learn more about the consolidation process here . Act quickly to avoid default. Default can result in consequences like garnishment of your wages, federal tax return, or Social Security.
Parent PLUS loans are educational loans, and the borrower can claim 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. Income limits and other tax filing rules may apply.
The "$100,000 loophole" for family loans refers to a tax rule where lenders avoid reporting imputed interest if the total loan amount (plus any other outstanding loans to that borrower) is $100,000 or less, and the borrower's net investment income is $1,000 or less; otherwise, the lender's taxable imputed interest is limited to the borrower's actual net investment income, avoiding the higher Applicable Federal Rates (AFR) normally required, making it a way to offer lower-interest loans with minimal tax hassle for the family.
Refinancing your existing Parent PLUS Loans with a private student lender is the only way to pursue a lower your interest rate. Your lender will determine your interest rate based on your credit.