Parent PLUS loans were not broadly cancelled in 2023, though targeted forgiveness occurred through IDR account adjustments. Payments resumed in October 2023 after a long pause. Instead of cancellation, major changes arriving by July 1, 2026, will cap new loans at $20,000/year and eliminate IDR plan eligibility for many new borrowers.
Elimination of Parent Plus loans by July 1, 2025.
(Note: The online PLUS application for 2025-2026 should not be submitted before June 1, 2025.) You may apply for a Direct PLUS Loan at studentaid.gov. If you have problems with the online application process you can contact Direct Loan Applicant Services at 1-800-433-3243 for assistance.
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 ...
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 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.
Parent PLUS borrowing is no longer “open-ended”
Parents could previously borrow up to the school's full cost of attendance (minus any other aid) with a Parent PLUS loan. Starting July 1, 2026, new loans will be limited to $20,000 per year, with a $65,000 lifetime cap per 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.
Defaulting on a Parent PLUS Loan can have serious financial consequences for student loan borrowers. Here's what happens if you haven't made a payment in more than 270 days: Immediate Consequences: Credit Score Impact: Your default will be reported to credit bureaus, which can significantly lower your credit score.
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.
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.
Parent Plus loans are federal loans that allow parents to borrow money to help pay for their child's undergraduate education expenses. In the event that the parent borrower passes away, the government will discharge and forgive the remaining Parent PLUS loan debt.
If you qualify, you may also defer repayment for the 6 months following the date that the student on whose behalf you borrowed ceases to be enrolled at least half time.
No, a Direct PLUS Loan made to a parent cannot be transferred to the child.
Undergraduate Loan Rules Are Not Changing
Undergraduate borrowing limits and Pell Grants will remain the same. However, Parent PLUS Loans will be capped at $20,000 per student per year and a $65,000 lifetime limit beginning July 1, 2026.
Parent PLUS loan interest rates
The interest rate for parent PLUS loans disbursed (sent out) between July 1, 2025, and June 30, 2026, is 8.94%—this rate is fixed for the life of the loan.
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.
Parent PLUS Loan borrowers now have an annual borrowing limit of $20,000 per student and a lifetime aggregate limit of $65,000 per student.
Parent PLUS loans are not eligible for any of the income-driven repayment (IDR) plans in and of themselves. You can, however, consolidate the Parent PLUS loans to a Direct Consolidation Loan at which point the borrower gains access to one of the IDR plans, but only one – the income contingent repayment plan (ICR).
While the IDR program offers multiple types of plans, Parent PLUS loan borrowers are only eligible for the Income-Contingent Repayment (ICR) plan. In ICR, payments are capped at 20% of a borrower's monthly discretionary income for 25 years, and any remaining debt is forgiven after that time.
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.