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.
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 double consolidation loophole is a way of making your Parent PLUS Loans eligible for the generous repayment terms of the SAVE program. You can do this by changing the source of your loan through multiple consolidations, changing it from an ineligible Parent PLUS Loan to an eligible Direct Consolidation Loan.
If you can't pay off the loan immediately, you have two options: rehabilitation and consolidation . Rehabilitation: After 9 months of reasonable payments (based on your income), your loan will be in good standing. Rehabilitation removes the default note from your credit report.
Parent PLUS Loans are eligible for total and permanent disability discharge if the parent borrower, not the student for whom you borrowed, is totally and permanently disabled. For more information on TPD eligibility: https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge.
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.
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.
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.
Private education loans are not eligible for consolidation. Direct PLUS Loans received by parents to help pay for a dependent student's education cannot be consolidated together with federal student loans that the student received. Learn what to do if you're not sure what kind of loan(s) you have.
The Education Department doesn't forgive loan balances for parents when they retire. It will keep sending bills and adding interest until you pay off the debt, die or become totally and permanently disabled, or qualify for one of the department's student loan forgiveness programs.
Can the loan be transferred to the student? No, a Direct PLUS Loan made to a parent cannot be transferred to the child. You, the parent borrower, are legally responsible for repaying the 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.
At the same time, the ICR plan extends your repayment term to 25 years. Any remaining loan balances will be forgiven after that time. As of now, you won't be taxed on the amount of student debt forgiven, although this could change in 2026, when the current regulations expire.
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.
Parent PLUS loans can be eligible for Income-Contingent Repayment (ICR) and Public Service Loan Forgiveness (PSLF). However, they must be consolidated into a federal Direct Consolidation loan first. Your eligibility for these programs can depend on your income and the type of employer you work for.
There are various circumstances and situations in which a Parent PLUS Loan may be discharged: School closure leading to the inability of your child to complete their program. Your child's school's failure to refund loan money following your child withdrawing from school, withstanding the law.
Parent PLUS loans have a fixed interest rate, and the borrower pays an origination fee for each loan. Parent PLUS loans are not subsidized, so interest begins to accrue on the outstanding loan balance as soon as funds are disbursed and continues to accrue even if the loan is in deferment.
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.
The borrower should complete a Federal Direct Parent PLUS Adjustment Form to reduce or cancel a Parent PLUS loan. To avoid complication with the return of funds, we recommend that you submit the form to our office for processing well before the funds disburse to the student's account.
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.
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.
Direct PLUS Loans for Parents
If there is money left over, the school will pay it to you. In some cases, with your permission, the school may give the leftover money to your child.
The parent's only legal recourse would be to sue the child for breaking the contract between the parent and child. In short, both the law and the loan terms are clear that the repayment of a Parent PLUS loan is the parent's obligation.
Note: You can request an increase in the amount of a Direct PLUS Loan you previously requested if it's for the same school, same award year, and same student. The loan can't exceed the cost of attendance (COA) minus other aid.