programs aren’t just for students. Many parents who are struggling to repay can also qualify for . A may be eligible for forgiveness through an income-contingent or through the program. There are also options for parents who took out a from a .
A , or , is a form of . In most cases, a will take out a once their child reaches their limits to cover the remaining costs. A is an unsubsidized . Because they are not , 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 with a or a and you’re looking to have your forgiven, you may want to consider one of the following options.
Student through Income-Contingent
Parent PLUS loans are not directly eligible for income-driven plans.
However, a Federal that includes Parent PLUS loans may be eligible for Income-Contingent (ICR). The must have entered on or after July 1, 2006, per the regulations at 34 CFR 685.208(a)(2)(iv)(D).
A that is in the or the Federal Family Education (FFELP) is eligible if it is included in a Federal .
Income-contingent bases the on 20% of the ‘s discretionary income, which is defined as the amount by which the ‘s adjusted gross income (AGI) exceeds 100% of the poverty line.
The remaining is forgiven after a 25-year (300 payments). Generally, the IRS treats cancelled as taxable income . But, the American Rescue Plan Act of 2021 made all tax-free through 2025.
An income-contingent , a must consolidate their into a , and repay the under the income-contingent . is the only income-driven program available to a . To qualify for
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
- Potential under President Biden
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.