A federal Direct PLUS Loan taken out by the parent of student is commonly referred to as a Parent PLUS loan. Compared to other federal student loan types, Parent PLUS loans are costlier and come with less flexibility than federal loans made directly to students. The interest rate and origination fee are both higher on Parent PLUS Loans compared to other federal student loans, and if you want to defer payments until after your student graduates, you must contact your loan servicer. Otherwise, repayment begins 60 days after disbursement.
The US Department of Education makes Direct PLUS Loans to parents who meet certain eligibility requirements, including:
- Proof that they are the biological or adoptive parent (or stepparent) of a dependent undergraduate student enrolled at least half-time at an eligible school
- They do not have an adverse credit history (unless they meet certain additional requirements); and
- They meet the general eligibility requirements for federal student aid
Although Parent PLUS loans offer fewer options and protections than other federal student loans, borrowers of this type of loan still have paths to relief. In this guide, we’ll look at strategic repayment and forgiveness options for borrowers of Parent PLUS loans.
Forgiveness and repayment options for Parent PLUS loans
Though limited, borrowers of Parent PLUS loans do have a number of options for repayment as well as potential paths to forgiveness, including Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF).1
Visit our Guide to Student Loan Repayment to learn more about repayment options for federal student loans such as Parent PLUS loans, and read on to learn more about getting Parent PLUS loans forgiven though IDR and PSLF.
Income-Driven Repayment Forgiveness
Income-Driven Repayment (IDR) plans adjust your monthly payments based on your income and family size, providing relief to borrowers facing financial hardship. 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. The borrower must have entered repayment on or after July 1, 2006. Additionally, Parent PLUS loans are not directly eligible for ICR – they must be consolidated first.
Consolidation
Before you can sign up for ICR and qualify for forgiveness through the plan, you must consolidate your PLUS loan(s) into a Direct Consolidation Loan. Learn more about consolidating student loans here or visit the Federal Student Aid website.
Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness (PSLF) offers a financial lifeline to borrowers working in qualifying public service jobs. Parent PLUS loan borrowers may be eligible for PSLF if they work full time for a government agency or qualifying nonprofit organization and make 120 (or 10 years) qualifying payments under the ICR plan.
Borrowers must consolidate their Parent PLUS loan into a Direct Loan and sign up for ICR before applying for PSLF. Under PSLF rules, if you consolidate your Parent PLUS loans, only qualifying payments you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the PLUS loans for parents before you consolidated them won’t count.
Also note that if you have federal student loans for your own education, consolidating them with your Parent PLUS loans will limit repayment plan options.
State-specific student loan forgiveness
In addition to IDR and PSLF, forgiveness options could be available to Parent PLUS loan borrowers at the state level. Many states offer their own student loan forgiveness programs tailored to various professions and industries.
Parent PLUS loan borrowers should explore these state specific initiatives which may provide relief based on eligibility criteria such as employment and critical fields like healthcare or education. Learn more about potential options for student loan forgiveness here.
Other forgiveness programs and discharges
Parent PLUS loan borrowers may also be able to qualify for student loan debt relief through other types of forgiveness programs and discharges, including closed school discharge, bankruptcy, disability, and death. Learn more about Parent PLUS loan discharge on the Federal Student Aid website.
Explore your options
Navigating forgiveness on Parent PLUS loans requires careful consideration of available options. Whether through federal programs like PSLF and IDR or state-specific initiatives, borrowers have avenues to alleviate the financial strain of student loan debt.
It’s essential to assess your eligibility, understand the requirements, and take proactive steps towards achieving forgiveness. Forgiveness on Parent PLUS loans is attainable, but it requires thorough understanding of available pathways and eligibility criteria.
If you have questions about Parent PLUS loans forgiveness or repayment strategies, schedule a free consultation with one of our student loan specialists. Our team can help you create a plan for managing your student loan debt based on your individual needs.
