It might make sense to consolidate your Parent PLUS Loans into a Direct Loan if:
You’re struggling to keep up with your monthly payments.
You work full-time for the government or a nonprofit organization.
You’ve made payments or been in forbearance or deferment for years.
The loans you took out to finance your kid’s education aren’t automatically eligible for any repayment options that let borrowers pay a portion of their income. Instead, the loan service puts them in the Standard Repayment Plan, which pays off the debt in a decade. That short-term can quickly make your payments unaffordable, depending on how much you borrowed.
Related: Parent PLUS Loan Double Consolidation
Consolidating might help reduce your monthly payments and boost your chances of keeping your loan in good standing. Parent PLUS Loans can be paid under an income-based plan after they’ve been consolidated into a Direct Loan. Specifically, they can be repaid under the income-contingent repayment plan, which caps your bill at 20% of your discretionary income and stretches the loan term over 25 years, depending on the loan amount.
The ICR Plan also puts you in line for two loan forgiveness programs: Public Service Loan Forgiveness and Income-Driven Repayment Plan Forgiveness.
Related: Does a Parent PLUS Loan Qualify for PSLF?
The PSLF Program forgives your remaining balance tax-free after you spend 10 years working in public service while making qualifying payments on your loans. IDR Forgiveness promises to clear your remaining student loan debt after you’ve been in repayment for at least 20 years.
The Biden administration temporarily expanded this program to give borrowers credit towards forgiveness even if they never moved to the ICR plan or were in forbearance or deferment for years. Some borrowers will need to begin the consolidation process by July 1, 2023, in order to qualify. Read more about the IDR Waiver.
Learn More: Parent PLUS Loan Forgiveness Retirement