Options for repaying your Parent PLUS loans | Consumer Financial Protection Bureau (2024)

FAQs

Options for repaying your Parent PLUS loans | Consumer Financial Protection Bureau? ›

Repayment plan options for Parent PLUS loans include Standard, Graduated, Extended, or Income-Contingent. Learn more about ICR and staying on track with income-driven repayment. Consider pros and cons before refinancing, and don't use credit cards or home equity to pay your student loans.

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 double consolidation loophole is a way of making your Parent PLUS Loans eligible for the generous repayment terms of the SAVE program. You can do this by changing the source of your loan through multiple consolidations, changing it from an ineligible Parent PLUS Loan to an eligible Direct Consolidation Loan.

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.

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.

Parent PLUS Student Loan Forgiveness

After consolidating with a Direct Consolidation Loan, Parent PLUS Loans can be forgiven through two programs: Income-Contingent Repayment (ICR) or Public Service Loan Forgiveness (PSLF).

If a borrower dies, their federal student loans are discharged after the required proof of death is submitted. The borrower's family is not responsible for repaying the loans. A parent PLUS loan is discharged if the parent dies or if the student on whose behalf a parent obtained the loan dies.

As a parent PLUS borrower, can I transfer responsibility for repaying the loan to my child? No, a Direct PLUS Loan made to a parent cannot be transferred to the child.

Can I get my name off a parent PLUS loan? ›

Refinancing is only way to transfer ownership of a Parent PLUS loan from you to your child. To do this your child must refinance your Parent PLUS loan into their own name.

Key Points. Normally, parent PLUS loan borrowers can't access the most generous income-driven repayment plans without jumping through loopholes. The popular double consolidation loophole will be closing in 2025. Until it closes, the loophole allows parent PLUS loan borrowers to access the SAVE plan.

For example, you usually don't want to combine Parent PLUS loans with any other type of loan, because consolidating them together could mean that you will only be eligible for an Income-Contingent Repayment (ICR) plan, which is usually more expensive than other IDR plans.

The repayment period is then stretched out over 25 years. Any remaining loan balance after that time is forgiven. To be clear, the PLUS loans made to parents cannot be repaid directly under the ICR plan.

In this scenario, by consolidating your Parent PLUS Loan, you will get access to the Income-Contingent Repayment (ICR) plan. ICR is one of the more expensive Income-Driven Repayment plans but can significantly lower payments for borrowers with low incomes and/or small loan balances.

You must be the biological or adoptive parent of a dependent undergraduate student enrolled at least half-time. You must be a U.S. citizen or eligible non-citizen. You generally must meet minimal credit standards, and the student must meet general eligibility requirements for financial aid.

The monthly payment is set at 20% of your discretionary income, which is defined as the amount by which your income exceeds 100% of the poverty line. After 25 years of payments under income-contingent repayment, the remaining balance will be forgiven.

The Income-Contingent Repayment Plan is the only income-driven repayment plan available to parent PLUS borrowers, and to repay your parent PLUS loans under the Income-Contingent Repayment Plan, you must first consolidate the loans into a Direct Consolidation Loan.

Generally, you'll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. Your required monthly payment amount will vary depending on how much you borrowed, the interest rates on your loans, and your repayment plan. Choose a repayment plan that best meets your needs.

Parent PLUS Loans aren't eligible for income-driven plans, including the income-contingent repayment plan. But don't worry. There's still a way to make loan repayment more manageable. By consolidating parent loans into a Direct Consolidation Loan, you'll be able to repay the new loan under the ICR plan.