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.
A Direct PLUS Loan made to you as a parent cannot be transferred to your child. You are responsible for repaying the loan.
If you're a parent who's taken out a Parent PLUS loan to support your child's higher education expenses, you have a chance to reduce your tax bill for the tax year through this specific deduction, potentially saving up to $2,500 per year.
Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school.
Are Direct PLUS Loans eligible for Public Service Loan Forgiveness (PSLF)? Your loan's eligibility for Public Service Loan Forgiveness (PSLF) depends on whether you have a Direct PLUS Loan for graduate or professional students or a Direct PLUS Loan for parents.
Nothing happens to Parent PLUS Loans in a divorce. The person who filled out the FAFSA paperwork and signed the promissory note remains responsible for repaying the debt. The lender will continue to hound the parent-borrower for payment. The divorce decree doesn't change that responsibility.
If the student's parents are divorced, both the custodial parent and the noncustodial parent are eligible to borrow from the PLUS loan program, provided that the combined amounts borrowed do not exceed the cost-of-attendance minus aid received cap.
The parent-borrower will have the option to choose "Me" or "The Student." If they choose "The Student," any available refund will be issued to the student. If they choose "Me" (refunds go to the parent-borrower), we are required to issue the refund to the parent- borrower.
The U.S. Department of Education is the lender. The borrower must not have an adverse credit history.
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.
The maximum Direct PLUS Loan amount that can be borrowed is the cost of attendance at your school minus any other financial assistance received.
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.
Defaulting on a Parent PLUS Loan can lead to serious consequences, including wage garnishment, credit score damage, and the loss of federal benefits. But you can recover through loan rehabilitation or consolidation with the U.S. Department of Education.
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.
Repaying a Parent PLUS loan is the legal responsibility of the borrower – the parent. While you may ask your child to contribute to repayment, it is ultimately your responsibility.
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).
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.
Finally, it's important to consider who is legally responsible for repaying the loan. With a Parent PLUS Loan, it's the parent's legal responsibility to repay the loan. You may agree with your child that they will repay the loan, but if they don't, it's your responsibility.
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.
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.
Can the loan be transferred to the student? No, a Direct PLUS Loan made to a parent cannot be transferred to the child. You, the parent borrower, are legally responsible for repaying the loan.
The Education Department doesn't forgive loan balances for parents when they retire. It will keep sending bills and adding interest until you pay off the debt, die or become totally and permanently disabled, or qualify for one of the department's student loan forgiveness programs.