Q: Are there Parent Plus Loan Forgiveness programs?

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There’s no specific Parent Plus Loan Forgiveness program. Instead, the US Department of Education offers two general student loan forgiveness programs that Parent Plus loans qualify for: Public Service Loan Forgiveness and student loan forgiveness under a repayment plan based on your income.

Parent Plus Loan Forgiveness under the PSLF program

The Public Service Loan Forgiveness program offers student loan forgiveness for public service workers.

To qualify for this loan forgiveness program, you have to:

  1. Have the right type of loan (only loans made under the Direct Loan program qualify);
  2. Work for the government or a qualifying nonprofit organization;
  3. Work full-time;
  4. Repay your Direct Loan under the right student loan repayment plan (REPAYE, PAYE, IBR, or ICR); and
  5. Make 120 qualifying payments.

Do those 5 things, and your loan balance will be forgiven. But if you fail to do any one of those things, there won’t be any student loan forgiveness for you — at least under this loan forgiveness program.

Download PSLF Employment Certification Form

For many Parent Plus Loan borrowers, they’ll likely need to consolidate their parent loans to secure eligibility for the PSLF program. Consolidation makes sure they have the right loan (Direct Plus Loans of a Parent Plus Loan) and have the option to pay under the right loan repayment program (income-contingent repayment).

Click here to learn more about What are the Deferment and Repayment Options for Parent Plus Loans?

Can Parent PLus Loans be forgiven based on my child working in public service?

Loan forgiveness for federal Parent Plus loans is based on the borrower’s situation.

So if the parent borrower works in public service, then she may have her loans forgiven.

Conversely, if the child of the parent borrower works in public service, the parent borrower may not have her student loan debt forgiven under the PSLF program.

Loan forgiveness for Parent Plus Loans under a repayment plan based on income

The remaining balance of your Parent Plus Loan can be forgiven after you make a number of monthly payments under the income-contingent repayment plan.

The income-contingent repayment plan will forgive (technically, it will cancel) your remaining student loan debt after you make 300 qualifying monthly payments.

To qualify for student loan forgiveness based on making a number of payments, you may need to consolidate your Parent Plus loan into a Federal Direct Consolidation Loan.

Only Direct Consolidation Loans of a Parent Plus Loans qualify for ICR loan forgiveness

Not all Parent Plus loans are the same.

Some student loan borrowers may be repaying a Parent Plus made under the Federal Family Education Loan program. Others may have a Direct Plus loan for a Parent that has yet to be consolidated. (Whether they’re Direct Unsubsidized loans or subsidized loans, doesn’t matter.)

In their current state, neither FFEL programs loans nor Direct Parent Plus loans qualify for loan repayment under the income-contingent repayment plan.

To qualify, you have to consolidate those loans into a new consolidation loan. The resulting loan will be a Direct Consolidation Loan of a Parent Plus Loan. That loan will qualify for the income-contingent repayment plan.

The added benefit of consolidation is you get to choose your loan servicer. So if you're not happy with your current loan servicer, consolidation offers you the chance to move your loans to the loan servicer you want.

Before you rush off to studentaid.gov to consolidate, know this:

If you consolidate your Parent Plus loans with your own federal student loans, you will no longer be eligible for the REPAYE, PAYE, or IBR repayment plans. Your consolidation loan will only be eligible for the income-contingent repayment plan. As a result, your monthly payment will be a lot higher than they would’ve been otherwise.

How is the monthly payment calculated under the income-contingent repayment plan?

Under the other income-driven repayment options (REPAYE, PAYE, and IBR) your monthly payment is based on your discretionary income. Your discretionary income is the difference between your adjusted gross income less 150% of the poverty level for your family size divided by 12.

Meanwhile, under the ICR repayment plan, your monthly payment will never be more than 20% of the poverty level for your family size divided by 12.

Long story short, your monthly payments will be much higher under the ICR plan then they would be under any of the other income-based repayment options.

But given that ICR is the only income-based repayment plan available for Parent PLus loans, choosing the ICR plan is the best repayment strategy for a parent borrower.

Can Parent Plus Loans be forgiven under the Teacher Loan Forgiveness program?

Parent Plus Loans aren’t eligible for the teacher loan forgiveness program. (The same is true of Federal Perkins Loans.)

You’ll need to explore the other forgiveness programs if you want to get your student loan debt forgiven.

Should I refinance my Parent Plus loan into a private student loan?

Refinancing your federal loan debt with a private lender makes sense on the surface. Oftentimes, private student loans offer much lower interest rates than do federal student loans. For many borrowers, the lower interest rate (depending on your credit score) can make their student loan payments more affordable.

The problem is that private loans don’t offer student loan forgiveness programs. And they don’t offer forbearances and loan payments based on your income as do federal student loans.

Because of those things, I rarely advise any client refinance federal student loans with a private lender.

In my opinion, Parent Plus Loans are better than private loans.

For that reason, most borrowers may find that it makes more sense to keep their loans with the federal government rather than go through with student loan refinancing.

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