Student loan forgiveness programs aren’t just for students. Depending on lender qualification requirements and borrower history, parent loan forgiveness is also possible. Many parents struggling to repay student loan debt can qualify for loan forgiveness.
A federal parent PLUS loan may be eligible for forgiveness through an income-contingent repayment plan or the Public Service Loan Forgiveness (PSLF) program. There are also options for parents that take out loans from private lenders.
What Is the Parent PLUS Loan?
A parent PLUS loan, or Direct PLUS loan, is a form of federal student aid. Once a student reaches federal student loan limits, parent borrowers will often take out a PLUS loan. A parent PLUS loan is an unsubsidized federal direct loan. Because they are not subsidized loans, interest accrues while the student is in college.
However, some parents borrow more than they can afford to repay. In 2013, the federal government removed annual and lifetime borrowing limits from parent PLUS loans, allowing parents to borrow the full amount of a college education. Since the government removed the limits, more parents defaulted on their PLUS loans.
So, does Parent PLUS loan forgiveness exist? Yes, but only in some circ*mstances.
Biden’s Student Loan Forgiveness
On August 24, 2022, Joe Biden announced a sweeping federal student loan forgiveness order, in which Parent PLUS Loans are included in. The plan attempted to forgive $10,000 for everyone and up to $20,000 for those who were approved for the federal Pell Grant program when they borrowed student loans.
The plan started to accept applications in October 2022 before several lawsuits were filed. In November 2022 the plan was stopped by an appeals court in Texas. The ruling included an injunction that stopped the forgiveness plan from moving forward.
In 2023, Supreme Court ultimately blocked this forgiveness plan, leaving borrowers looking elsewhere for relief.
Options for Parent Loan Forgiveness
If you’re a parent borrower with a Direct PLUS loan or a private loan and you’re wondering: can parent PLUS loans be forgiven, consider these options:
- Income-Contingent Repayment
- Public Service Loan Forgiveness
- Temporary Expanded Public Service Loan Forgiveness
- Federal Agencies
- Military Forgiveness Programs
- State Student Loan Forgiveness
- Employer-paid Student Loan Assistance
- Refinancing
Let’s now take a deeper look at each of these options.
Income-Contingent Repayment
Parent PLUS loans are not directly eligible for income-driven repayment plans.
However, a Federal Direct Consolidation loan that includes Parent PLUS loans may be eligible for Income-Contingent Repayment (ICR). The borrower must have entered repayment on or after July 1, 2006, per the regulations at 34 CFR 685.208(a)(2)(iv)(D).
A parent PLUS loan in the Direct Loan program or the Federal Family Education Loan Program (FFELP) is eligible if it is included in a Federal Direct Consolidation Loan.
Income-contingent repayment bases the monthly payment on 20% of the borrower’s discretionary income, which is defined as the amount by which the borrower’s adjusted gross income (AGI) exceeds 100% of the poverty line.
The remaining loan balance is forgiven after a 25-year repayment term (300 payments). Generally, the IRS treats cancelled debt as taxable income for student loan borrowers. But, the American Rescue Plan Act of 2021 made all student loan forgiveness tax-free through 2025.
An income-contingent repayment plan is the only income-driven repayment program available to a parent PLUS borrower. To qualify for this parent student loan forgiveness, a borrower must consolidate their PLUS loan into a Direct Consolidation Loan, and repay the consolidation loan under the income-contingent repayment plan.
Public Service Loan Forgiveness for Parent PLUS Loans
Parent borrowers may be eligible for Public Service Loan Forgiveness (PSLF) after making 120 qualifying payments (ten years).
Parent PLUS loans are eligible if they are in the Direct Loan program or included in a Federal Direct Consolidation Loan. The borrower must work full-time in a qualifying public service job.
Eligible repayment plans include standard repayment and income-driven repayment plans. If a borrower repays their loans under the standard repayment plan for ten years, there will be nothing left to forgive. So, the borrower will need to repay their loans in an income-driven repayment plan to earn some forgiveness under public service loan forgiveness.
If a borrower consolidates their Parent PLUS loans into a Federal Direct Consolidation Loan, the consolidation loan will be eligible for income-contingent repayment, as noted above.
Another option is the Temporary Expanded Public Service Loan Forgiveness (TEPSLF) program, enacted by the Consolidated Appropriations Act, 2018 (P.L. 115-141). A Federal Direct Consolidation Loan that repaid a Federal PLUS Loan is eligible for TEPSLF if some or all of the 120 qualifying payments were made under a graduated repayment or extended repayment plan, provided that the last year of payments were at least as much as the borrower would have paid under an income-driven repayment plan.
Federal Agencies
Federal agencies may repay federal education loans, including Parent PLUS loans, as an employee recruitment or retention tool, but only if the employee is the parent PLUS loan borrower. Thus, a Parent PLUS loan may be forgiven if the parent works for the federal agency, but not if the student works for the federal agency.
Military Forgiveness Programs
Parent PLUS loans may be eligible for repayment under the various military loan forgiveness programs, depending on the service. The loan forgiveness may be limited to Parent PLUS loans borrowed on behalf of a student who is a Service member. Private parent loans are not eligible.
State Student Loan Forgiveness
Several states offer student loan repayment assistance for borrowers who move to the state or specific cities or counties within the state. Parent loans, including both Parent PLUS and private parent loans, may be eligible.
Employer-Paid Student Loan Assistance
Parent loans are eligible for many employer-paid student loan repayment assistance programs, commonly known as LRAPs. This includes both Parent PLUS loans and private parent loans. This isn’t total forgiveness but it can help you reduce your total bill and pay them off faster.
Loan Discharge Programs
Parent PLUS loans are also eligible for certain discharges, including:
- Death of the parent or death of the student on whose behalf the Parent PLUS loan was borrowed
- The parent (but not the student) becomes totally and permanently disabled
- Bankruptcy discharge (rare)
- Closed school discharge
- False certification discharge
- Identity theft discharge
- Unpaid refund discharge
- Defense to repayment
Private parent loans may also be eligible for a death or disability discharge, depending on the lender.
Refinancing a Parent Loan
If you don’t qualify for loan forgiveness, you may be able to lower your payments by refinancing the Parent PLUS Loan. However, a federal loan can only be refinanced into a private loan. That means if you have a federal loan you will lose federal loan protections such as:
- Forbearance and deferment
- Choice of repayment option
- Potential student loan forgiveness
You may also have the option to refinance your parent loan in your child’s name. This might make sense if your child is now graduated and working, and you are nearing retirement. Keep in mind, however, that not every loan servicer will offer this type of student loan refinancing for parents.
The Bottom Line
Parent PLUS loan forgiveness is possible under a few different circ*mstances. On top of those, student loan discharges and refinancing are other options available to parents that struggle to repay a Direct PLUS loan. Forgiveness is not easy, though. The best bet for most people will be to find a way to pay off the loans as quickly as possible.
Frequently Asked Questions (FAQs)
Are Parent PLUS loans forgiven if the parent dies?
If the parent who takes out the Parent PLUS loans dies then the PLUS loan will be discharged. The loan is also discharged if the student who the loan was taken out for dies.
Can Parent PLUS loans be discharged?
A Parent PLUS loan is discharged if the parent or student dies or if the parent who took the loan out ever becomes totally and permanently disabled. There is also a possibility for the loan to become discharged in bankruptcy, though it is rare. Additionally, if you qualify for any forgiveness program then the loan could be discharged.
Do parents have to pay back Parent PLUS loans?
Yes, the parent who takes the loan out is responsible for repaying that loan. You cannot transfer the loan to a child or even the student who used the money for school. Parents must repay the loan according to the repayment terms agreed upon when the loan was taken out.
How long do you have to pay back Parent PLUS loans?
The term and repayment of your Parent PLUS loan will depend on the repayment plan that you selected. Typically, you’ll have between 10 and 25 years to repay these loans.
