Yes, Parent PLUS loans can be forgiven or discharged, but it's more complex than other federal loans, requiring consolidation and specific conditions like working in public service for Public Service Loan Forgiveness (PSLF) after 10 years, Income-Contingent Repayment (ICR) after 25 years, or Total & Permanent Disability (TPD)/death for discharge. The key is that the parent borrower, not the student, must meet the criteria, and the loan usually needs consolidation to access income-driven plans like ICR for potential forgiveness, notes Federal Student Aid, Federal Student Aid, and www.tateesq.com.
Parent PLUS borrowers can achieve forgiveness through programs like Income-Contingent Repayment (ICR) after 25 years, Public Service Loan Forgiveness (PSLF) after 10 years of qualifying payments, or immediate discharge due to permanent disability or death.
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.
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.
Undergraduate Limits and Parent PLUS Loans
There are no changes for undergraduate loans, although undergraduate loans will count towards the new lifetime limits. However, starting July 1, 2026, Parent PLUS loans will be capped at $20,000 per student per year, with a $65,000 lifetime limit per dependent student.
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.
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.
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.
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.
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.
Consolidating Parent PLUS loans costs nothing; there are no origination fees. It may simplify your monthly payment if you've been managing multiple payments to different loan servicers. Consolidation can make some types of federal loans eligible for income-driven repayment plans.
Borrowers must consolidate their Parent PLUS loan into a Direct Loan and sign up for ICR before applying for PSLF. Under PSLF rules, if you consolidate your Parent PLUS loans, only qualifying payments you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF.
Out of all the income-driven repayment plans, Parent PLUS loans only qualify for the Income-Contingent Repayment (ICR) plan. Enrolling in ICR requires you to consolidate your Parent PLUS loans. Once you're on ICR, you can pursue Public Service Loan Forgiveness.
The "$100,000 loophole" for family loans refers to a tax rule where lenders avoid reporting imputed interest if the total loan amount (plus any other outstanding loans to that borrower) is $100,000 or less, and the borrower's net investment income is $1,000 or less; otherwise, the lender's taxable imputed interest is limited to the borrower's actual net investment income, avoiding the higher Applicable Federal Rates (AFR) normally required, making it a way to offer lower-interest loans with minimal tax hassle for the family.
For survivors of deceased loved ones, including spouses, you're not responsible for their debts unless you shared legal responsibility for repaying as a co-signer, a joint account holder, or if you fall within another exception.
Other types of debt that cannot be alleviated in bankruptcy include debts for willful and malicious injury to another person or property. If you don't list a debt on your bankruptcy, it won't be alleviated. Income tax debt can only be discharged in rare cases.
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.
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.
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.