No, Parent PLUS loans are solely in the name of the parent who borrowed them.
Parent PLUS loans are made directly to parents for their child's education. Under the current rules, parents cannot transfer these federal loans to a child, and they are solely responsible for paying back the loan.
The school will first apply parent PLUS loan funds to the student's school account to pay for tuition, fees, room and board, and other school charges. If any loan funds remain, your child's school will give them to you to help pay other education expenses for the student.
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.
Parent PLUS Loan borrowers can have their debt forgiven after 10 years of working full-time for the government, nonprofit, or other qualifying employers. For the past year, retired public servants could submit an application to get retroactive credit towards the Public Service Loan Forgiveness Program.
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.
The parent, not the student, is responsible for repaying the PLUS loan. PLUS loans don't qualify for all of the income-driven repayment (IDR) plans that student loans do. PLUS loans have large borrowing limits, making it possible to take on too much debt.
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.
The Parent PLUS Loan is a federal loan program that allows parents of dependent undergraduate students to borrow money to help pay for their child's education. Unlike other federal student loans, which are taken out in the student's name, the Parent PLUS Loan is taken out in the parent's name.
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.
To be eligible for a Direct PLUS Loan for parents, you must be a biological or adoptive parent (or in some cases a stepparent), not have an adverse credit history, and meet the general eligibility requirements for federal student aid (which the child must meet as well).
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.
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.
Medical debt and hospital bills don't simply go away after death. In most states, they take priority in the probate process, meaning they usually are paid first, by selling off assets if need be.
Any borrower with ED-held loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if the loans are not currently on an IDR plan. Borrowers with FFELP loans held by commercial lenders or Perkins loans not held by ED can benefit if they consolidate into Direct Loans.
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.
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.
What happens to my parent's PLUS loan if my parent dies or if I die? 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.
Is It Better to Get a Parent PLUS Loan or a Private Loan? Both loans have advantages and drawbacks. Parent PLUS loans have more options for repayment plans and forgiveness, but interest rates tend to be higher and the federal government has greater power to collect than private lenders.
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.
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.
For 2021, you can forgive up to $15,000 per borrower ($30,000 if your spouse joins in the gift) without paying gift taxes or using any of your lifetime exemption. (These amounts are the same as in 2020.) But you will still have interest income in the year of forgiveness. Forgive (don't forget).
There is no minimum interest rate you are required to charge, but you will be liable for taxes if you decide to give a below market interest loan to the IRS. This is because as a lender, you are expected to charge market interest and if you don't do so, you are in effect liable for the interest foregone on the loan.
A loan between family members, or even friends, isn't help—it's a trap for both parties. Whenever you loan money to a friend or family member, you've become their creditor. You're now a lender, and they're a borrower.