When you retire, your Parent PLUS loan doesn't disappear; you're still responsible for payments, but you can lower them or aim for forgiveness through specific programs, most notably Income-Contingent Repayment (ICR) (after Direct Consolidation) or Public Service Loan Forgiveness (PSLF) if you worked in public service; otherwise, low Social Security income might lead to $0 payments under ICR, but default risks Social Security garnishment.
The Parent PLUS loan must have entered repayment on or after July 1, 2006. Payments are 20% of discretionary income (AGI above 100% of the federal poverty guideline). Any remaining balance is forgiven after 25 years of qualifying payments.
The "Parent PLUS loan loophole" refers to the "double consolidation loophole," a multi-step process allowing Parent PLUS borrowers to access cheaper income-driven repayment (IDR) plans (like SAVE) by obscuring the loans' origins, typically requiring two separate consolidations to bypass the normal restriction to Income-Contingent Repayment (ICR). This loophole, which involves consolidating loans into two separate Direct Loans and then consolidating those two into a final loan, has a deadline of July 1, 2025, to be completed to access benefits like potential loan forgiveness after 20-25 years, though its status is uncertain due to ongoing legal challenges.
As with loans made to students, a parent PLUS loan can be discharged if you die, if you (not the student on whose behalf you obtained the loan) become totally and permanently disabled, or if your loan is discharged in bankruptcy. Your parent PLUS loan may also be discharged if the child for whom you borrowed dies.
Repayment plan options for Parent PLUS loans include Standard, Graduated, Extended, or Income-Contingent. Learn more about ICR and staying on track with income-driven repayment.
Yes, Parent PLUS loans can be forgiven or discharged, but it's more complex than other federal loans, requiring consolidation into a Direct Loan for Income-Driven Repayment (IDR) or Public Service Loan Forgiveness (PSLF) after 10 years, or immediate discharge for death/total disability of the parent or student, plus other limited options like bankruptcy or closed school.
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.
You repay 9% of everything earned above that amount, so earn more and you repay more each month. The loan is wiped after 40 years whether you've paid a penny or not. This means many people will be repaying their student loans for most of their working lives.
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.
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.
If you have low income and can't pay your Parent PLUS Loans, an Income-Contingent Repayment plan (ICR) could provide the relief you need. This income-driven payment plan caps your monthly payment at 20% of your discretionary income or the amount you'd pay under a 12-year fixed plan—whichever is less.
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.
Are student loans forgiven when you retire? No, the federal government doesn't forgive student loans at age 50, 65, or when borrowers retire and start drawing Social Security benefits.
Parent PLUS loan borrowers will be limited to $20,000 a year per student. Parent PLUS loan borrowers' lifetime aggregate limit will be $65,000 per student. Direct student loan offers will be prorated for students who are enrolled less than full time.
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.
If you repay your loans under an IDR plan, the end of term balance on your student loans may be forgiven after you make a certain number of payments over 20 or 25 years (240 or 300 monthly payments).
Loans closed in good standing will remain on your credit report for up to 10 years. Adverse information, like a missed payment, can remain on your credit report for seven years.
You can achieve Parent PLUS loan forgiveness by consolidating into a Direct Consolidation Loan, enrolling in an eligible repayment plan (usually ICR), and meeting specific program requirements, such as employment in public service for PSLF, documented total disability, borrower defense eligibility, or other qualifying ...
Grandfather provisions:
There is a grandfather clause for Grad PLUS Loan borrowers, students who are currently borrowing under any Federal Direct Loan provision, may borrow for an additional three years or the completion of their program, whichever comes first.