Parents who are sending their children to college frequently choose to use parent PLUS loans. These federal loans, which are accessible to parents of undergraduate students, can temporarily lower the cost of attending college.
Parent PLUS loans have fewer repayment options and higher interest rates than federal loans that undergraduates can take out on their own. They are, however, qualified for a number of the same forgiveness schemes as other federal loan types.
Forgiveness of parent PLUS loans is possible, for instance, if you select a specific federal repayment plan, take certain jobs, or are permanently disabled. Here are the ways that you, as a parent PLUS loan borrower, may be eligible for forgiveness.
What Is Parent PLUS Loan Forgiveness?
Parent PLUS loan forgiveness reduces your repayment obligations, just like other types of student loan forgiveness. You can stop paying off your debt and have the remaining balance forgiven if you meet certain criteria.
Parents who borrow PLUS loans must be eligible for loan forgiveness based on their own circumstances, not those of the child they were borrowing the loans for. For instance, the Public Service Loan Forgiveness (PSLF) program offers loan forgiveness to borrowers who work in government and nonprofit positions after a specific period of time. Under this program, the parent—not the student—must hold a position that qualifies for loan forgiveness.
Parent PLUS loan forgiveness frequently necessitates actively determining your eligibility and submitting an application. But occasionally, the government might get in touch with you to let you know that you qualify for a forgiveness program.
Check Out: Student Loan Forgiveness Calculator
3 Options for Parent PLUS Loan Forgiveness
Parent PLUS loan forgiveness is available in a variety of ways, such as based on the repayment strategy you select or your chosen career path.
Four different income-driven repayment (IDR) plans, which cap federal student loan payments at a percentage of income and result in forgiveness after 20 or 25 years, are available to student borrowers. However, there is only one IDR option available to parent borrowers: income-contingent repayment (ICR).
Parent PLUS loans are forgiven under this plan after 25 years of repayment. By combining their student loans, borrowers must become eligible by converting their PLUS loans into a federal direct loan. On StudentAid, you can submit your online consolidation application for parent PLUS loans. gov. Once you’ve consolidated, you can sign up for ICR for nothing online.
According to IRS regulations, if you enroll in ICR right away, it’s possible that you’ll have to pay income tax on the amount that is ultimately forgiven. But before your repayment term is over, these forgiveness regulations could change.
Public Service Loan Forgiveness
Borrowers who work full-time for an eligible nonprofit or the government may be eligible for the Public Service Loan Forgiveness (PSLF) program, which offers tax-free forgiveness. Before submitting an application for forgiveness, borrowers must make 120 qualifying payments. You’ll use an income-driven repayment plan to make payments while pursuing PSLF, keeping monthly expenses low and enabling the greatest amount of forgiveness.
There are a few extra steps to complete in order to participate as a parent PLUS borrower whose employment qualifies you for PSLF. For instance, you must combine PLUS loans into a direct consolidation loan before selecting ICR as your repayment option. When your child graduates from high school and begins repayment, if you already work for a qualified employer, you may be eligible for forgiveness as soon as 10 years later, one of the quickest forgiveness periods possible.
Discharge Options for Parent PLUS Loans
Although “forgiveness” and “discharge” refer to various loan cancellation requirements, their fundamental meanings are the same.
The government refers to loan forgiveness as when your debt is forgiven because you hold a particular type of employment, while the following circumstances are thought of as grounds for discharge. In both situations, your loan repayment is finished and you are no longer required to make payments. The following circumstances make parent PLUS loans dischargeable:
Alternatives to Student Loan Forgiveness
There are other ways to limit the amount you pay toward parent PLUS loans or, if necessary, take a break from payments entirely if the aforementioned options aren’t helpful for your situation.
Through federal deferment and forbearance programs, parent borrowers can delay student loan payments, but interest will continue to accrue. The government’s Covid-19 forbearance, which is scheduled to expire on January 31, 2022, is one exception. Parent PLUS borrowers are not required to make payments at this time, and no interest is being accrued.
Parent PLUS borrowers have the option to request general forbearance, which covers a variety of situations, or deferment when the Covid-19 forbearance expires. The two programs operate similarly for PLUS borrowers, but they are applicable in various circumstances. For example, you can defer payments on loans for up to three years if you’re unemployed. Longer periods of time may be used with some types of forbearance, such as mandatory forbearance.
Deferment and forbearance may not be difficult to obtain, but accrued interest can quickly mount up and make repayment much more challenging in the long run. Only use them if you require temporary assistance, and don’t anticipate needing to pay back your loans for an extended period of time.
Student Loan Repayment Assistance Programs
Look elsewhere if you can’t find any federal resources to assist you with your parent PLUS loans. Many state agencies offer repayment programs for student loans. For example, if you want to be a teacher, nurse, doctor, or attorney, you typically have to work. There are frequently additional prerequisites, such as working a certain number of years in a rural or high-need area. You can receive free money to pay off your student loans more quickly, though this isn’t the same as forgiveness.
The private sector is also growing more and more interested in student loan repayment. Companies are increasingly providing employees with loan repayment as a benefit. If you’re looking for a new job, look into companies that provide loan repayment as a benefit.
Student loan refinancing can assist you in saving money on interest if your financial situation is sound, which means you have a good or excellent credit score and a reliable source of income. Your PLUS loans are paid off and replaced with a new private student loan from a private student loan provider when you refinance, ideally with a lower interest rate. That may result in fewer payments made toward your loans overall or lower monthly installments.
Because they are more likely to have a solid financial foundation than student borrowers, parents are frequently excellent candidates for refinancing. That implies that they might be eligible for interest rates that are lower than the federally set PLUS loan rate they initially received.
Refinancing comes with some drawbacks, though. If you need to lower your payments, you won’t be able to switch to an ICR plan because the loan is no longer federal, and forbearance is frequently limited to 12 or 24 months over the course of the loan term. Most refinance lenders also don’t offer forgiveness. Keep your loans in place and choose a federal program that can result in cancellation if getting your debt forgiven is your top priority.
Please rate this article to help the editorial staff. Email: Be sure to enter a valid email address. Comments: We’d love to hear from you. Please enter any comments you have. Thank you for your feedback, but your email address is invalid. Please try again later. Buying Guides.
Brianna McGurran is the Loans Analyst for Forbes Advisor. She most recently worked as a staff writer and spokesperson for NerdWallet, where she wrote the Associated Press-syndicated financial advice column “Ask Brianna.” She served as a spokesperson and provided her knowledge to publications like The New York Times, ABC World News Tonight, and the Today Show.
What disability qualifies for student loan forgiveness?
You may be eligible for a total and permanent disability (TPD) discharge of your federal student loan or TEACH Grant service obligation if you are totally and permanently disabled. You won’t be required to pay back your loans or finish your TEACH Grant service commitment if you receive a TPD discharge.
Is there any forgiveness for parent PLUS loans?
Parent PLUS Loans: Public Service Loan Forgiveness Parent borrowers may qualify for Public Service Loan Forgiveness (PSLF) after ten years and 120 qualifying payments. Parent PLUS loans that are part of the Direct Loan program or a Federal Direct Consolidation Loan are eligible.
Can student loans be forgiven because of disability?
You may be eligible for a discharge of your federal student loans and/or Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation if you are totally and permanently disabled.
Can I get my name off a parent PLUS loan?
Through a private lender, a parent PLUS loan can be refinanced in the student’s name. The student can refinance by taking on new debt to settle their parent’s current PLUS loan. The student would be responsible for making payments to the private lender on the newly refinanced debt.