Student loan forgiveness programs aren’t just for students. Many parents who are struggling to repay student loan debt can also qualify for loan forgiveness. A federal parent PLUS loan may be eligible for forgiveness through an income-contingent repayment plan or through the Public Service Loan Forgiveness program. There are also options for parents who took out a loan from a private lender.
A parent PLUS loan, or direct PLUS loan, is a form of federal student aid. In most cases, a parent borrower will take out a PLUS loan once their child reaches their federal student loan limits to cover the remaining costs. 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 limits were removed, more parents are defaulting on their PLUS loans, according to a study from Trellis Research.
If you’re a parent borrower with a direct PLUS loan or a private loan and you’re looking to have your debt forgiven, you may want to consider one of the following options.
Parent PLUS Loan Forgiveness Student through 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 that is 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 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 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.
for Parent PLUS Loans
Parent PLUS loans are eligible if they are in the . The must work full-time in a qualifying public service job. or included in a Federal
Eligible plans include standard and income-driven plans . If a . repays their loans under the standard for 10 years, there will be nothing left to forgive. So, the will need to repay their loans in an income-driven to earn some forgiveness under
If a , the will be eligible for income-contingent , as noted above. consolidates their Parent PLUS loans into a Federal
Another option is the Temporary Expanded (TEPSLF) program, which was enacted by the Consolidated Appropriations Act, 2018 (P.L. 115-141) . A Federal that repaid a is eligible for TEPSLF if some or all of the 120 qualifying payments were made under a graduated or extended , provided that the last year of payments were at least as much as the would have paid under an income-driven .
Other Options for of Parent Loans
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 . Thus, a 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 under the various military programs , depending on the service. The may be limited to Parent PLUS loans borrowed on behalf of a student where the student is the Service member. Private parent loans are not eligible.
Several states offer 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.
Parent loans are eligible for many employer-paid assistance programs , commonly known as LRAPs. This includes both Parent PLUS loans and private parent loans.
Loan Discharge Programs
Parent PLUS loans are also eligible for certain discharges, including:
- Death of the parent or death of 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
If you don’t qualify for , you may be able to lower your payments by refinancing. However, a can only be refinanced into a . That means if you have a you will lose government benefits such as:
- Forbearance and
- Choice of
You may also have the option to refinance your parent 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 will offer this type of for parents.