Credible takeaways
- Parent PLUS loans can be forgiven under the Income-Contingent Repayment (ICR) plan and Public Service Loan Forgiveness (PSLF) program.
- Parents can become eligible for these forgiveness programs only if they consolidate their PLUS loans into a Direct Consolidation Loan.
- The total outstanding parent PLUS loan debt reached $112.2 billion by the end of 2023.
The average debt for parent PLUS loan borrowers stands at $29,526, with approximately 3.8 million individuals in repayment, according to the latest federal data. Despite the major role these loans play in college funding, parents are finding themselves excluded from benefits of recent policy changes around student debt relief.
Parent PLUS loan forgiveness is possible, but it can be more complicated than forgiveness for other student loans. Here's how you can find relief.
Do parent PLUS loans qualify for forgiveness?
Parent PLUS loans can qualify for federal student loan forgiveness under two possible programs:
- Public Service Loan Forgiveness: Parents can have their loans forgiven after making 10 years' worth of monthly payments.
- Income-Contingent Repayment: Parents can have their remaining loan balance forgiven after making 25 years' worth of monthly payments.
Important:
These forgiveness paths only become available after you’ve consolidated your debt into a Direct Consolidation Loan.
Related: How Parent PLUS Loans Work
Income-Contingent Repayment (ICR) forgiveness
Once you consolidate your loans into a Direct Consolidation Loan, you can become eligible for forgiveness through an income-driven repayment plan. For parent PLUS loan borrowers, the Income-Contingent Repayment (ICR) plan is your only option.
Under the ICR plan, payments equal the lesser of:
- The amount that would be due on a 12-year repayment plan with a fixed monthly payment, adjusted based on your income, or
- 20% of your discretionary income, divided by 12.
Payments on ICR are not capped and in some cases they can be higher than the amount you'd pay on the standard 10-year repayment plan. Keep this in mind, especially if you expect your income to increase in the future, as it may lead to higher loan costs.
The repayment period for the ICR plan is 25 years. After that time, any of your remaining debt is forgiven.
Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness is another forgiveness program available to eligible parents who consolidate their parent PLUS loans. Under the rules of PSLF, parents can get the remainder of their loans discharged after making a total of 120 on-time payments while working full-time at a not-for-profit organization or government job.
When you consolidate PLUS Loans, the rules of PSLF state that only new payments on the Direct Consolidation Loan count toward the required 120 payments.
However, if you consolidate your loans after July 1, 2024, and you were employed in an eligible job prior to the time you consolidated, a weighted average will be used to determine what payments were made on parent PLUS loans eligible for forgiveness.
Good to know:
The interest rate on parent PLUS loans is currently set at 8.05% between July 1, 2023, and July 1, 2024.
More relief for parent PLUS loans
If you're a parent PLUS loan borrower struggling to make payments, you have other relief options besides just consolidating:
Deferment or forbearance
Deferment and forbearance result in a pause in payments. Parents may be able to qualify for deferment or forbearance for many reasons, including economic hardship; undergoing cancer treatment; performing qualifying military service; enrolling in a rehabilitation program; unemployment; or experiencing other financial difficulties.
IDR payment count adjustment
The Department of Education is reviewing past payments made by borrowers on income-driven repayment plans to determine if payments not previously counted can count toward forgiveness. Months spent in repayment prior to consolidation may result in an adjustment of your payment count, as can months spent in certain types of deferment or forbearance. This adjustment can result in your loans being forgiven faster.
Bankruptcy discharge
Getting student loans discharged in bankruptcy is difficult but possible. You'll typically need to file a separate action called an "adversary proceeding" and prove that being forced to repay your loan would cause undue hardship.
Other discharges
A parent PLUS loan may be also be fully or partially discharged under the following circumstances:
- Military service: U.S. military service counts toward Public Service Loan Forgiveness. Parent borrowers can potentially be eligible for PSLF if they're serving in the U.S. military, provided they meet the other eligibility requirements.
- Identity theft: If an identity thief has fraudulently taken a parent PLUS loan out in your name, you may be eligible for a discharge of the fraudulent loan.
- Disability: Federal student loans, including parent PLUS loans, may be eligible for a discharge if the borrower becomes permanently and completely disabled.
- Death: If the student for whom you borrowed the student loan dies, your parent PLUS loan may be discharged.
- School closure: If the student for whom you borrowed the loan couldn't complete their studies because the school closed, your parent PLUS loan may be discharged.
Tip:
If you have private parent loans, a student loan refinance may be able to help you reduce your interest rate, stretch out your repayment timeline, or both.
Frequently asked questions
Can I consolidate parent PLUS loans?
Parent PLUS loans are eligible for the federal Direct Consolidation Loan program, as long as the borrower started repayment of the loan on or after July 1, 2006. Consolidating your parent PLUS loan into a Direct Consolidation Loan is the only way to access Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans.
Avoid refinancing your parent PLUS loans since you'll lose access to income-driven repayment plans, deferment and forbearance options, and potential widespread forgiveness in the future.
Related: Is Student Loan Consolidation Right For Me?
What happens if my parent dies?
If a parent dies with an outstanding parent PLUS loan, the remaining balance of the debt is discharged. Parents can also have their PLUS loan balance discharged if the student who the loan was obtained for dies.
Are parent PLUS loans considered undergraduate loans?
Parent PLUS loans are available to help parents pay for school for dependent undergraduate students. Parents cannot take out PLUS loans on behalf of their graduate student. However, graduate students can take out graduate PLUS loans on their own behalf if they choose to.
What happens if I can't pay my parent PLUS loan?
If you cannot pay your parent PLUS loan, consider exploring options such as deferment or forbearance to pause payments. You can also consolidate into a Direct Consolidation Loan to become eligible for an income-driven payment plan. This will set payments at a percentage of income. You should take these steps to avoid defaulting on your loan, which can have serious consequences, including damage to your credit and debt collection activities.
