Parent PLUS loans are the financial responsibility of the parents, not the student. If the student agrees to make payments on the PLUS loan, but fails to make the payments on time, the parents will be held responsible. These days the PLUS loan is referred to as either the Parent PLUS or Grad PLUS loan.
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.
In some cases, the cost of attendance at these institutions balloons beyond the amount covered by a student's financial aid package, and parents may fill the gap with a PLUS (parent loan for undergraduate students), an unsubsidized federal loan issued directly to parents that accrues interest while a student is in ...
The Bottom Line. Yes, borrowers with Parent PLUS Loans can have their debts forgiven after 10 years (or 120 eligible monthly payments) with the PSLF program.
A Direct PLUS Loan made to you as a parent cannot be transferred to your child. You are responsible for repaying the loan. Can I ever postpone making loan payments? Yes, under certain circumstances you may receive a deferment or forbearance, which allows you to temporarily stop or lower your payments.
If you're a parent or graduate student seeking a Direct PLUS Loan, one of the requirements to qualify is that you must not have an adverse credit history. If your application is denied because of an adverse credit history, don't give up. You still have options.
Unlike all other federal student loans, there are no explicit borrowing limits for parent PLUS loans. Parents may borrow up to the full cost of attendance, which is determined by the institution, not the government, and includes books, travel and living expenses. There are no ability-to-repay standards for PLUS loans.
Whether your family is rich, poor, or somewhere in between, you can take advantage of student loans provided by the US government. These loans (known as Federal Loans, Direct Loans or Stafford Loans) offer lower rates and more flexible payback options than you can find from almost any other source.
The $100,000 Loophole.
With a larger below-market loan, the $100,000 loophole can save you from unwanted tax results. To qualify for this loophole, all outstanding loans between you and the borrower must aggregate to $100,000 or less.
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.
Can more than one parent borrow a PLUS Loan? If a student's parents are divorced, both the custodial and non-custodial parent may borrow a PLUS Loan for their dependent, undergraduate student.
However, you don't need to meet a minimum credit score to qualify. Instead, the check looks for “adverse credit,” such as bankruptcies, repossessions, wage garnishment, or tax liens in the past five years. But even if you do have adverse credit, you may still be able to get a parent PLUS loan.
You can get student loans without parents if you're classified as an independent student or, in some cases, a dependent student.
The Sallie Mae Parent Loan offers competitive interest rates, no origination fee, and a choice of repayment options, and it can cover up to 100 percent of the school-certified cost of attendance. Customers have the option of choosing the repayment plan that best meets their needs.
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. PLUS loans don't qualify for all of the income-driven repayment (IDR) plans that student loans do.
Pros and cons for parent PLUS loans
PLUS loans don't require good credit, making them an ideal option for low-credit borrowers. However, you can't have an adverse credit history, such as bankruptcies or loan defaults within the past five years.
Parent PLUS loans can potentially be forgiven after 10 years under specific conditions, such as through the Public Service Loan Forgiveness (PSLF) program after consolidation into a direct consolidation loan. Parent borrowers must enroll in the Income-Contingent Repayment (ICR) plan to qualify for PSLF.
With Parent PLUS loans, the parent can borrow up to the cost of the child's attendance each year, minus any financial assistance that has been awarded, with no limit on the amount borrowed. This is true regardless of the parent's income.
Apply for an Income-Driven Repayment (IDR) Plan
On an IDR plan, your payments are based on your income. Under an IDR plan, payments may be as low as $0 per month. You can apply for an IDR plan, including the Saving on a Valuable Education (SAVE) Plan, by using the IDR application (linked below).
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.
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.
Steps for how to transfer a Parent PLUS loan to your child:
Your child must apply for a student loan refinance in their own name. The application is based on your child's information alone. This is why it's important to ensure they have a steady income and meet the lender's criteria.