When you retire, Parent PLUS loans aren't forgiven automatically; they remain your debt, but you can use Income-Driven Repayment (IDR) plans like Income-Contingent Repayment (ICR) to lower payments based on lower retirement income, potentially to $0, but you must consolidate them first, and after 20-25 years on IDR, balances can be forgiven, though income from pensions/Social Security counts. If you die or become totally disabled, the loan is discharged; otherwise, payments continue, and Social Security benefits can even be garnished if you default.
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.
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.
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.
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.
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.
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.
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.
In most cases, debt isn't inherited and is often settled by the estate or forgiven.
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.
Repayment Plan Restrictions
New Federal Parent PLUS Loans taken out after July 1, 2026, will not qualify for the popular income-driven repayment (IDR) plans, including the new Repayment Assistance Plan (RAP). Repayment will be limited to the Standard Repayment Plan, which may result in higher fixed monthly payments.
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.
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.
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.
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 ...
The following are the available repayment plans for Direct PLUS Loans made to parents: Standard Repayment Plan—Under this plan, you'll have fixed monthly payments for up to 10 years. Graduated Repayment Plan—Under this plan, your payments will start off lower and then gradually increase, usually every two years.
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.
Retirees who default on their student loans may have up to 15% of their Social Security payments garnished to satisfy their debt. Borrowers in retirement with federal student loans should look into enrolling in an income-driven repayment plan or applying for student loan forgiveness programs like PSLF.
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.
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.
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.