In addition, parent PLUS loans aren't eligible for some other types of federal student loan forgiveness programs. To get around this, some borrowers go through two or more federal consolidations to hide the origin of the loans, then request an IDR plan. This process is often called the double consolidation loophole.
Parent PLUS loan borrowers can consolidate into a Direct Consolidation Loan, even without another loan, and have access to Income-Contingent Repayment (ICR).
But during the Direct PLUS Loan Application process, you'll go through a credit check to confirm one specific requirement: not having an adverse credit history. a recent bankruptcy discharge, tax lien, wage garnishment, or foreclosure.
Yes, your Parent PLUS Loan can be transferred to your child. The best way is to refinance the loan with a private lender under your child's name.
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.
Parent borrowers can be eligible for Public Service Loan Forgiveness (PSLF) for their federal Parent PLUS Loans — but the process can be a bit complex. To start, it's important to understand how the PSLF Program works.
The repayment period is then stretched out over 25 years. Any remaining loan balance after that time is forgiven. To be clear, the PLUS loans made to parents cannot be repaid directly under the ICR plan.
To be eligible for a Direct PLUS Loan for parents, you must be a biological or adoptive parent (or in some cases a stepparent), not have an adverse credit history, and meet the general eligibility requirements for federal student aid (which the child must meet as well).
Occasionally, excess funds are the result of a Parent PLUS Loan. If there are excess funds from a Parent PLUS Loan, it is refunded directly to the borrower.
The yearly limit on an undergraduate PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $12,000 and you receive $4,000 in other financial aid, your parents could borrow up to $8,000.
How long does processing take? Due to the value of PLUS applications at peak times (particularly summer and the start of the Fall term), PLUS loans can take 4 weeks for processing and for the loan to be posted on the student's financial aid summary.
A parent PLUS loan is discharged if the parent dies or if the student on whose behalf a parent obtained the loan dies.
“It's abusive,” Lloyd, who lives in Detroit, said of Parent Plus loans, a program with $111 billion in outstanding debt held by 3.7 million people. “The interest rates are predatory. The payments are high.
Starting in 2025, the Department of Education will close a loophole that allows parent borrowers to find relief through income-driven repayment (IDR) and other programs. Once this "Parent PLUS cliff" hits, borrowers will experience reduced relief options after 2025.
For example, you usually don't want to combine Parent PLUS loans with any other type of loan, because consolidating them together could mean that you will only be eligible for an Income-Contingent Repayment (ICR) plan, which is usually more expensive than other IDR plans.
Parent requirements:
You generally must meet minimal credit standards, and the student must meet general eligibility requirements for financial aid. Grandparents and legal guardians aren't eligible to take out these loans unless they legally adopt the student.
PLUS loans are federal loans that parents can take out to cover their child's college costs. The parent, not the student, is responsible for repaying the PLUS loan.
In November 2022 the plan was stopped by an appeals court in Texas. The ruling included an injunction that stopped the forgiveness plan from moving forward. In 2023, Supreme Court ultimately blocked this forgiveness plan, leaving borrowers looking elsewhere for relief.
There is no forgiveness available to Parent PLUS Loan borrowers looking to retire. Remember that Parent PLUS Loan forgiveness is only possible through the Income-Contingent Repayment Plan or PSLF after first consolidating your Parent PLUS Loan into a federal Direct Consolidation Loan.
Federal Parent PLUS Loans are forgiven when the parent borrower dies or when the child they borrowed the loan for dies. The U.S. Department of Education won't go after the surviving spouse or any other family member to repay the debt.
Parent PLUS loans are also discharged upon the death of the student on whose behalf the loans were taken out. This is the case even if the loans had an endorser or co-signer on the loan(s).
PLUS Loan funds are disbursed to the student's account at the beginning of each semester.
After the dependent student has completed the FAFSA, the parent can apply for a Parent PLUS Loan online at https://studentloans.gov under the section “Complete PLUS Request Process.” The parent will need to reapply for the Parent PLUS Loan each new academic year.
Parent PLUS Loan interest rates and fees are high
Parent PLUS loans have a fixed interest rate for the entire term of the loan. The origination fee on top of the loan is a percentage of the loan amount.