Defaulting on a Parent PLUS loan triggers severe consequences, including immediate demand for the full balance, damaged credit, wage garnishment, seizure of tax refunds (Treasury offset), potential lawsuits, and loss of eligibility for future federal aid, with the government having broad collection powers like Social Security offsets. It's crucial to contact your loan servicer to explore options like deferment, forbearance, or income-driven repayment before missing payments, as resolving default is much harder.
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.
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.
Like with other federal student loans, there is no statute of limitation on a Parent PLUS loan, meaning there is no set amount of time when a creditor can take legal action to collect and sue a borrower for outstanding debt when he or she fails to make payments.
Parent PLUS Loans are forgiven when the parent or the child from whom they borrowed the loans dies. Your surviving family members can't inherit the debt. Before that day comes, there are other opportunities to get rid of your student loan debt.
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.
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.
You cannot be jailed or arrested for failing to pay student loans. Default is a civil issue, not a criminal one. But missing payments still brings serious financial consequences, which vary depending on whether you have federal or private loans.
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.
Can private student loans take your house? Until you default on private student loans, your house is safe. Private lenders must sue the borrower and get a judgment before putting a lien on a home or taking money from a bank account.
Cancellation & Forgiveness Options
Parent PLUS loan borrowers in default face the full range of draconian government collection powers, including wage garnishment, Social Security offsets and tax refund offsets. There is no time limit on government collection.
Beginning July 1, 2026, Parent PLUS loans will be capped at $20,000 per year with a $65,000 aggregate limit. Previously, Parent PLUS Loans had no cap and could be taken out for whatever amount was needed to get the student up to Cost of Attendance.
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.
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.
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.