Parent borrowers may be eligible for Public Service Loan Forgiveness (PSLF) after making 120 qualifying payments (ten years). Parent PLUS loans are eligible if they are in the Direct Loan program or included in a Federal Direct Consolidation Loan. The borrower must work full-time in a qualifying public service job.
If you're still making payments on your Parent PLUS Loan after 25 years of on-time payments (for a total of 300 payments), the remaining balance of your loan will be forgiven.
Parent PLUS Loans on the surface are ineligible for PSLF because these loans don't provide access to a qualifying repayment plan. However, if you consolidate your Parent PLUS Loans under a Federal Direct Consolidation Loan, you can access Income-Contingent Repayment (ICR) which is eligible for PSLF.
In addition, parent PLUS loans aren't eligible for some other types of federal student loan forgiveness programs. To get around this, some borrowers go through two or more federal consolidations to hide the origin of the loans, then request an IDR plan. This process is often called the double consolidation loophole.
You're not eligible for federal student loan forgiveness programs if you have private loans, but there are other strategies for managing private loan debt.
Only federal Direct Loans can be forgiven through PSLF. If you have other federal student loans such as Federal Family Education Loans (FFEL) or Perkins Loans you may be able to qualify for PSLF by consolidating into a new federal Direct Consolidation Loan.
Those who have been on repayment plans, hold federal direct loans or federal family education loans and have completed 20 or 25 years of qualifying months are eligible for forgiveness, depending on when the loans were originated, the type of loan borrowed and the specific type of plan.
There is no forgiveness available to Parent PLUS Loan borrowers looking to retire. Remember that Parent PLUS Loan forgiveness is only possible through the Income-Contingent Repayment Plan or PSLF after first consolidating your Parent PLUS Loan into a federal Direct Consolidation Loan.
Parent PLUS loans account for $111 billion
Currently, 3.7 million parents have $111.3 billion in Parent PLUS loans outstanding. The average parent PLUS loan is roughly $30,000. Parent PLUS loans also come with an interest rate of more than 8%, compared with 5.5% for undergraduate student loans.
Income-Contingent Repayment is the only income-driven repayment plan parent PLUS loan borrowers can use. To be eligible, you must first consolidate your parent PLUS loans. Switching to Income-Contingent Repayment could lower your payments significantly if you qualify.
And yes, that would've included Parent PLUS Loans. But in June 2023, the Supreme Court blocked Biden's forgiveness. So, if you were banking on this plan to free you of your Parent PLUS Loans . . . know it's not happening.
Parent PLUS loan borrowers can consolidate into a Direct Consolidation Loan, even without another loan, and have access to Income-Contingent Repayment (ICR).
Transfer the Parent Loan to a Spouse or Child
Your spouse or child can transfer the Parent PLUS Loan into their name if they have a good credit score (e.g., 680+) and a steady income showing they can pay back the college debt plus their living expenses.
A Direct PLUS Loan made to you as a parent cannot be transferred to your child. You are responsible for repaying the loan. Can I ever postpone making loan payments? Yes, under certain circumstances you may receive a deferment or forbearance, which allows you to temporarily stop or lower your payments.
Parent PLUS Loans have four repayment plans: 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.
A parent PLUS loan is discharged if the parent dies or if the student on whose behalf a parent obtained the loan dies.
On August 24, 2022, Joe Biden announced a sweeping federal student loan forgiveness order, in which Parent PLUS Loans are included in. The plan attempted to forgive $10,000 for everyone and up to $20,000 for those who were approved for the federal Pell Grant program when they borrowed student loans.
Similar to other federal student loans, parent PLUS loans are nearly impossible to discharge in bankruptcy. Parent PLUS loan borrowers in default face the full range of draconian government collection powers, including wage garnishment, Social Security offsets and tax refund offsets.
Drawbacks of the Parent PLUS Loan
Timing: Many parents face high education debt burdens at a time of life when earning power generally decreases and limited income is needed for living or medical expenses. Defaulting on a parent PLUS loan can lead to the garnishment of Social Security benefits, tax refunds and wages.
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.
At what age do student loans get written off? There is no specific age when students get their loans written off in the United States, but federal undergraduate loans are forgiven after 20 years, and federal graduate school loans are forgiven after 25 years.
While parent PLUS loan forgiveness isn't as widely available as forgiveness for student borrowers, a few options do exist. Some options include the Income-Contingent Repayment plan (forgiveness after 25 years of payments) and Public Service Loan Forgiveness (forgiveness after 10 years), as well as other methods.
There are a few reasons your account may unexpectedly list a balance of zero: You got a new loan servicer. It's common for loan servicers to change, so your account may be zero with your old servicer if your loan amount was transferred to another servicer.
The remaining unpaid balance of loans is forgiven after 25 years. Income-Based Repayment (IBR)—Depending on when you first took out loans (before or on or after July 1, 2014), payments are generally 10% or 15% of the borrower's discretionary income, but never more than the 10-year Standard repayment plan amount.
Once you have made your 120th payment, submit a PSLF form to count your qualifying payments and apply for forgiveness. After we receive your PSLF form, your loans will be reviewed for eligibility for forgiveness.