Repayment terms usually range from 10 to 25 years. To qualify for the Income-Contingent Repayment Plan, you must consolidate your Parent PLUS loan. If you can't pay your Parent PLUS loan, immediately contact your loan servicer to discuss your options.
Yes, borrowers with Parent PLUS Loans can have their debts forgiven after 10 years (or 120 eligible monthly payments) with the PSLF program.
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.
In addition to the lack of practical discharge in bankruptcy, and the lack of income-based repayment programs, the other big problem with Parent Plus loans is that no one is looking at your ability to repay the loan when the loan is made.
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 average Parent PLUS Loan debt is based on Q4 of each year or the most recent data published (as 2022 currently only has Q3). Based on the information from Federal Student Aid, as of 2022, the average Parent PLUS Loan debt is $29,528.
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.
The monthly payment is set at 20% of your discretionary income, which is defined as the amount by which your income exceeds 100% of the poverty line. After 25 years of payments under income-contingent repayment, the remaining balance will be forgiven.
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.
Parent PLUS loans can be forgiven under the Income-Contingent Repayment (ICR) plan and Public Service Loan Forgiveness (PSLF) program. Parents can become eligible for these forgiveness programs only if they consolidate their PLUS loans into a Direct Consolidation Loan.
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.
The interest rate for Parent PLUS Loans first disbursed on or after July 1, 2024, and before July 1, 2025, is currently 9.08%. This rate is fixed for the life of the loan.
The rest can be erased after a decade of work in public service or after you've made 20 years' worth of payments under the income-contingent repayment plan. Ahead, learn what happens to your parent loans when you retire and how to get the balance forgiven.
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.
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.
Generally, you'll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose.
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.
The maximum Direct PLUS Loan amount that can be borrowed is the cost of attendance at your school minus any other financial assistance received.
If you're a parent or graduate student seeking a Direct PLUS Loan, one of the requirements to qualify is that you must not have an adverse credit history. If your application is denied because of an adverse credit history, don't give up. You still have options.
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.
However, federal parent PLUS loans offer a standard fixed interest rate, regardless of credit score or income level. These loans also come with federal benefits and protections, like deferment, forbearance and Income-Contingent Repayment (ICR).
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.
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.
The origination fee on a Parent PLUS loan is 4.2% of the loan amount, which can either be taken out of the amount that'll end up being disbursed or added onto the loan amount and thus be charged interest over the life of the loan.