Parent PLUS Loan Forgiveness Options
While Parent PLUS Loan forgiveness won’t make your debt disappear overnight, certain programs could lead to significant financial relief down the line. Federal relief is awarded over time for parent borrowers enrolled in the Income-Contingent Repayment plan (after 25 years) or pursuing Public Service Loan Forgiveness (after 10). It’s also possible to seek meaningful relief via state and privately run loan repayment assistance programs as well as through student loan refinancing.
Here are the details of realistic options for Parent PLUS Loan forgiveness and assistance:
1. Parent PLUS Loan forgiveness via Income-Contingent Repayment
One way to get your Parent PLUS loans forgiven is through the income-driven plan known as Income-Contingent Repayment (ICR). This plan caps your monthly payments at 20% of your discretionary income or the amount you would pay on a fixed 12-year plan, whichever is lower.
It also extends your repayment terms to 25 years, so you’ll be paying less each month. If you still have a balance at the end of 25 years, the remaining amount will be forgiven.
Your remaining balance will be discharged, but it will be considered taxable income if you receive relief in 2026 or later, when the student loan forgiveness provisions expire. So make sure to prepare for one last expense before you can say goodbye to your Parent PLUS loans.
Bottom line: This kind of loan forgiveness takes a long time, but it could be a good option if you need relief from high monthly bills. The Office of Student Aid offers a handy Loan Simulator tool to predict your monthly payments.
How to get Parent PLUS Loan forgiveness via ICR
There’s just one problem with getting your Parent PLUS loans on ICR, though — to make them eligible, you need to consolidate them first with a Direct Consolidation Loan.
Here are the steps to take to get your Parent PLUS loans on ICR and eventually, qualify for loan forgiveness:
Step 1: Apply for a Direct Consolidation Loan through StudentLoans.gov.
Step 2: Talk to your loan servicer and choose ICR.
Step 3: Make payments on time for 25 years to get your loans forgiven. Pay any potential tax bills related to your loan forgiveness.
Two and a half decades is a long time to wait, but at least there’s a light at the end of the tunnel. By keeping up with payments, you can eventually get Parent PLUS loan forgiveness.
2. Public Service Loan Forgiveness
A second option for Parent PLUS loan forgiveness — and one that doesn’t take as long as the ICR approach — is Public Service Loan Forgiveness (PSLF).
Under this program, parents who work full time for certain government entities or nonprofits and make consistent payments for 10 years can get their loans forgiven.
Just like with ICR, though, you’ll have to change up your repayment plan to qualify.
Bottom line: After 10 years, you could see forgiveness of your Parent PLUS Loan (now technically a Direct Consolidation Loan). And here’s more good news: Under PSLF, your forgiven loans are never considered taxable income.
How to get Parent PLUS Loan forgiveness via PSLF
If you stayed on the standard 10-year plan, you wouldn’t have any remaining balance left on your loans to forgive. And you’re not eligible for most income-driven repayment plans with the exception of ICR, if you consolidate first.
So again, you’ll need to apply for a Direct Consolidation Loan and then get your loan on ICR. Assuming you have a large enough loan and work for a qualifying employer, this route could lead you to loan forgiveness.
|Latest news on PSLF for parent borrowers|
|Unfortunately, Parent PLUS loans were largely excluded from the PSLF waiver enacted in October 2021.|
If you work in public service, hold onto relevant documentation that you might need when you apply. You could fill out and submit the PSLF Employment Certification form annually, for instance, or more often if you change employers.
|Are there other forms of Parent PLUS Loan forgiveness?|
Though it goes by a different name, Parent PLUS Loan borrowers could receive a student loan discharge in rare situations, such as:
● School closure
3. Loan repayment assistance programs based on your career
While public servants could qualify for Parent PLUS loan forgiveness through PSLF, professionals in other sectors might be eligible for state-run loan repayment assistance programs. Some common careers that qualify include:
There are also more and more companies that pay off student loans for employees. Similar to a 401(k) match, these companies pay off their employees’ student loans up to a certain amount.
Bottom line: Depending on your career or employer, you could qualify for student loan assistance and get rid of your Parent PLUS loans ahead of schedule. It might even be worth your time to talk to your current human resources representative, or even switch employers or industries if it means getting meaningful student loan relief.
4. Refinance Parent PLUS loans in your child’s name
As a parent borrower, your options for student loan forgiveness are limited to forgiveness from ICR or through PSLF, both of which take a long time to get financial relief.
Instead of counting on forgiveness, you might also consider trying to transfer Parent PLUS loans to your student (or ex-student, in most cases). Even though you took out the loans in your name, you could trade them into your child’s name through student loan refinancing.
Bottom line: This transfer of responsibility could be a good option if you’re struggling with repayment, but your child is now graduated and doing well financially. It’s important to know, though, that refinancing federal student loans turns them into private ones.
As a result, your child will lose access to federal protections, like income-driven repayment plans and forbearance, as well as forgiveness programs like PSLF. So if you want to retain federal protections, refinancing probably isn’t the best move.
But if you don’t need those options, refinancing could reduce your costs of borrowing with a lower student loan interest rate.
How to seek Parent PLUS Loan relief via refinancing
Your child must be the one who applies for student loan refinancing and gets approved, though you could act as a cosigner. Most lenders look for a steady source of income and a strong credit score before approving a refinanced student loan.
If your child has a creditworthy profile, they could qualify for a lower interest rate than the often high rate that Parent PLUS loans have. Plus, they could choose new repayment terms of shorter or longer lengths.
If refinancing isn’t currently an option and forgiveness seems too far off, consider other changes to your repayment, such as…
- Changing your repayment plan
- Applying for a deferment or forbearance