Getting rid of a Parent PLUS loan involves repayment, consolidation for income-driven plans, forgiveness programs, or discharge. Key options include using the Income-Contingent Repayment (ICR) plan (via consolidation), qualifying for Public Service Loan Forgiveness (PSLF), or transferring the debt to the student via private refinancing.
Yes, Parent PLUS loans can be forgiven or discharged, but it often requires specific actions like consolidating the loan into a Direct Consolidation Loan to access Income-Contingent Repayment (ICR) or Public Service Loan Forgiveness (PSLF), or by meeting criteria for total and permanent disability discharge or death. Forgiveness pathways are limited compared to other federal loans, primarily relying on the 25-year ICR plan or PSLF if the parent works in public service, as Parent PLUS loans don't directly qualify for most other income-driven plans.
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.
Federal Parent PLUS Loans opens in new tab are loans taken out by parents of dependent undergraduate students, enrolled at least half-time, to help pay for their child's college expenses. Parents are responsible for repaying Parent PLUS loans.
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.
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.
Parent Plus loans are federal loans that allow parents to borrow money to help pay for their child's undergraduate education expenses. In the event that the parent borrower passes away, the government will discharge and forgive the remaining Parent PLUS loan debt.
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.
Look for a lender that offers cosigner release. This allows the primary borrower (your child) to release the cosigner (you) from the loan once they've met specific criteria, such as a having made a certain number of consecutive on-time payments, meeting minimum credit requirements, and providing proof of income.
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.
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 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.
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.
Forgiveness and repayment options for Parent PLUS loans
Though limited, borrowers of Parent PLUS loans do have a number of options for repayment as well as potential paths to forgiveness, including Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF).
How to Pay Off Parent PLUS Loans Faster: 7 Ways
50% of your budget goes to necessities: rent, utilities, transportation, insurance, groceries, etc. 30% goes to wants: dining out, shopping, gym membership, entertainment, etc. 20% goes towards savings and debt repayment: student loans, auto loans, credit cards, emergency savings, etc.
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.
In Canada, a consumer proposal or bankruptcy will not extinguish your student loan debt unless 7 years have passed from the time you last attended school (part-time or full-time) to the day you file. If it has been less than 7 years, you still have options for payment plans and extended grace periods, etc.