Generally, you'll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. Your required monthly payment amount will vary depending on how much you borrowed, the interest rates on your loans, and your repayment plan. Choose a repayment plan that best meets your needs.
The Double Consolidation Loophole for Parent PLUS Loans is a strategy that reduces your monthly payments through better income-driven repayment plans (such as PAYE, IBR, or SAVE) achieved by consolidating your loans twice.
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.
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 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.
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.
You can get out of Parent PLUS Loans through forgiveness programs like PSLF or, in rare cases, by discharging the loan in bankruptcy. Otherwise, refinancing or consolidating may help lower your payments, but won't remove your obligation to repay.
What happens to my parent's PLUS loan if my parent dies or if I die? Your parent's PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.
Parent PLUS loans are costlier and offer less flexibility than federals loans made directly to students. Here are the details: The interest rate and origination fee are both higher than student loans. If you want to defer payments until after your student graduates, you must contact the servicer.
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.
While you may consolidate Parent PLUS Loans with a Federal Direct Consolidation Loan, refinancing is the only way to lower your interest rate or transfer a Parent PLUS Loan to the student. This option comes with a variety of pros and cons that you will want to explore before you make a decision.
The best way to pay off parent PLUS loans faster is to pay more than the minimum each month. That's true for any kind of student loan. But parent PLUS borrowers can also get rid of their loans more quickly by refinancing with a private lender.
According to the most recently available data from the National Center for Education Statistics (NCES), the average loan amount for Parent PLUS loans in 2019-2020 was $34,630. When adjusting for inflation, that's $37,970 in 2021-2022 constant dollars.
Your Last Resort: Private Loans
These loans have different repayment options than federal loans and will most likely cost you more in interest. Also, they may not have the same kinds of protections in case of disability or death as do the federal loans. Private loans generally should be taken out only as a last resort.
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.
This repayment plan leads to loan forgiveness after 25 years under normal conditions, but borrowers pursuing PSLF could have remaining debt forgiven after 10 years (if you still have a balance left). Also note that monthly payments on the ICR plan are not capped, so there's no limit on how high they can go.
Forbearance is also possible on Parent PLUS Loans. Generally, forbearance is requested when you experience a short-term financial hardship and can't make your student loan payment. Interest accrues while the forbearance lasts, and you're expected to begin making payments at the end of the period.
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.
Summary: The Parent PLUS Loan is a federal loan that parents of dependent undergraduate students can use to help pay for their child's education. The Direct Parent PLUS Loan offers a fixed 9.08% interest rate for the 2024 - 2025 school year and flexible loan limits.
You can take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
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.
After at least 20 years of student loan payments under an income-driven repayment plan — IDR forgiveness and 20-year student loan forgiveness. After 25 years if you borrowed loans for graduate school — 25-year federal loan forgiveness.
The repayment period for Parent PLUS loans starts right after you receive the final disbursement of the loan while your student is in school. Repayment terms usually range from 10 to 25 years. To qualify for the Income-Contingent Repayment Plan, you must consolidate your Parent PLUS loan.