Are Parent Loans Eligible for Student Loan Forgiveness?

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Mark Kantrowitz

By Mark Kantrowitz

May 24, 2021

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.

Public Service Loan Forgiveness for Parent PLUS Loans

Parent borrowers may be eligible for Public Service Loan Forgiveness after making 120 qualifying payments (10 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 10 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, which was 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.

Other Options for Loan Forgiveness of Parent Loans

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 where the student is the 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.

Loan Discharge Programs

Parent PLUS loans are also eligible for certain discharges, including:

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. However, a federal loan can only be refinanced into a private loan. That means if you have a federal loan you will lose government benefits 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.

A good place to start:

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