Parent PLUS Loan Forgiveness: How it Works [2024]

1. Parent PLUS Loan borrowers may be eligible for the one-time account adjustment, which offers credit toward forgiveness based on time spent in forbearance, repayment, and deferment. The deadline to apply is June 30, 2024.

2. If you work full-time for a government organization or non-profit, you might qualify for Public Service Loan Forgiveness after making 120 qualifying payments on your Direct Loans.

3. The “double consolidation” loophole lets Parent PLUS Loan borrowers qualify for the new SAVE plan, which caps payments at 10% of discretionary income and offers faster forgiveness. To take advantage of this loophole, borrowers must consolidate their loans before July 2025.

4. Later this year, Parent PLUS Loan borrowers may be eligible for Biden’s “Plan B” forgiveness program, which aims to provide broad-based relief, including waiving unpaid interest, forgiving debt for long-term borrowers, and providing relief for those who attended low-financial-value programs.

Are you a parent struggling with Parent PLUS loans and looking for ways to have them forgiven? You’re not alone. The burden of student loan debt can be overwhelming, not just financially but also emotionally.

But know this: There are options to help you manage and potentially eliminate this debt. Our team has helped parents like you:

• Secure over $50 million in loan forgiveness

• Drastically reduce their monthly payments, often from over $3,000 to less than $100

• Put them on a path to total loan forgiveness

Over the past three years, President Joe Biden has introduced a dizzying number of changes to student loan forgiveness, cancellation, and debt relief programs — even after the Supreme Court struck down his first plan to provide up to $20 thousand to every borrower who received a Pell Grant.

Many of those changes help Parent PLUS loan borrowers, providing relief beyond merely switching from the Standard Repayment Plan to an income-contingent repayment plan.

In this article, we’ll summarize the current Parent PLUS Loan forgiveness options, including:

• Recent developments and strategies that could help you get closer to having your loans forgiven

• Eligibility requirements and application processes

• The potential impact of these forgiveness options on your financial situation

Whether you’re a long-time borrower or starting to explore your options, this guide will equip you with the knowledge you need to make informed decisions about your Parent PLUS loans. Let’s dive in and explore the paths to loan forgiveness available to you.

Related: What Happens to Parent PLUS Loans When I Retire?

Since moving into the White House, President Biden has introduced several initiatives and programs to provide relief to all federal student loan borrowers, including those with Parent PLUS Loans.

The most powerful changes for parents:

1. One-time account adjustment: It is especially helpful for parents who had loans for their education or work in public service.

2. SAVE Plan: Lowers monthly payments and leads to loan forgiveness after several years of payments.

3. Public Service Loan Forgiveness: Offers loan forgiveness after 120 qualifying payments for borrowers working in public service jobs.

4. Biden’s Plan B Forgiveness: A proposed initiative to provide relief through interest waivers, debt forgiveness for long-term borrowers, and targeted relief for those who attended low-financial-value programs.

Other helpful forgiveness options:

• Total and Permanent Disability Discharge

• Borrower Defense to Repayment

• Closed School Discharge

These three programs can wipe out your entire loan balance, but fewer people qualify because the eligibility requirements are much more stringent than the other programs.

Related: Are Parent PLUS Loans Forgiven After 10 Years?

What it is: The one-time account adjustment is a temporary program introduced by the Biden administration to help federal student loan borrowers, including those with Parent PLUS Loans, get closer to loan forgiveness. This initiative is especially beneficial for parents with loans for their own education and their child’s education.

How it works: Under this program, the Department of Education will automatically review your account and grant you credit for past periods of repayment, forbearance, and deferment. This credit can help you qualify for loan forgiveness more quickly under existing programs like IDR Plan and Public Service Loan Forgiveness.

The real power of the one-time account adjustment lies in its ability to fast-forward your progress toward loan forgiveness for all of your student debt. By consolidating your loans from different periods, you can have your entire student loan debt forgiven, tax-free.

For example, let’s say a parent borrowed loans for their own education in 1998 and then later for their children in 2020. By consolidating these loans together and taking advantage of the one-time account adjustment, our team got the entire student loan debt forgiven, providing a life-changing financial reset for the parent.

Who qualifies: If you are a Parent PLUS loan borrower with Direct Loans or Federal Family Education Loans (FFEL) held by the Department of Education, you are eligible for the one-time account adjustment. This includes borrowers who have consolidated their loans into a Direct Consolidation Loan.

How to apply: You do not need to take any action to receive the one-time account adjustment. The U.S. Department of Education will automatically review your account and apply the credit to your eligible loans.

Deadline: To benefit from the one-time account adjustment, you must have eligible loans by June 30, 2024. After this date, the program will no longer be available, and any new loans you take out will not be eligible for the adjustment.

Related: At What Age Are Parent PLUS Loans Forgiven?

What it is: The SAVE (Saving on a Valuable Education) Plan is a new income-driven repayment plan that can significantly lower monthly payments and offer loan forgiveness for federal student loan borrowers, including those with Parent PLUS Loans. This plan replaces the Revised Pay As You Earn (REPAYE) Plan. It offers much more affordable payments than the Income-Contingent Repayment Plan.

How it works: Under the SAVE Plan, your monthly payments are capped at 10% of your discretionary income, which is calculated based on your income and family size. If you make these payments for 20-25 years (depending on your loan balance and degree level), any remaining balance on your loans will be forgiven.

The “double consolidation” loophole is a game-changer for Parent PLUS loan borrowers. By consolidating your loans twice, you can escape expensive student loan payments under the ICR Plan and become eligible for the SAVE Plan. This change could reduce your monthly payments by a factor of 10 or more.

Here’s how it works:

1. First, consolidate your Parent PLUS loans into a Direct Consolidation Loan.

2. Then, reconsolidate that loan with other eligible federal loans, such as Direct Loans or FFEL Program loans.

3. Once this process is complete, apply for the SAVE Plan.

Our team has used this loophole to help many parents slash their monthly payments from over $3,000 to less than $300, making their student debt much more manageable and putting them on a path to total loan forgiveness.

Receiving credit through the one-time account adjustment can also help you get closer to loan forgiveness under the SAVE Plan. The adjustment will count past periods of repayment, forbearance, and deferment as qualifying payments toward the 20-25-year forgiveness timeline.

Who qualifies: Parent PLUS loan borrowers can access the SAVE Plan by using the double consolidation loophole.

How to apply: To apply for the SAVE Plan, you must first consolidate your Parent PLUS loans and then reconsolidate them with your other eligible federal loans. Once complete, apply for the SAVE Plan through your loan servicer.

Deadline: To take advantage of the double consolidation loophole and qualify for the SAVE Plan, you must consolidate your loans before July 2025.

Related: How Parent PLUS Loans Can Qualify for SAVE

What it is: Public Service Loan Forgiveness is a federal program that forgives the remaining balance on your Direct Loans after you make 120 qualifying payments while working full-time for a government organization or a nonprofit.

How it works: To qualify for PSLF, you must make 120 qualifying payments (equivalent to 10 years) while working full-time for an eligible employer. A qualifying payment is a full, on-time payment made under an income-driven repayment plan, such as the SAVE Plan.

The one-time account adjustment can help you reach the 120-payment milestone more quickly. Under this adjustment, past periods of repayment, forbearance, and deferment will be counted as qualifying payments toward PSLF. This means that if you’ve been working in public service for several years but haven’t been on an income-driven repayment plan or haven’t consolidated your loans, you may still receive credit for those years of service.

For example, if you’ve been working in public service for 5 years and have spent 36 months in forbearance during that time, the one-time adjustment will count those 36 months as qualifying payments towards PSLF. This can significantly reduce the time it takes for you to reach the 120-payment requirement.

Who qualifies: To be eligible for PSLF, you must:

1. Work full-time for a government organization (federal, state, local, or tribal) or a non-profit organization (501(c)(3) or other qualifying non-profit).

2. Have Direct Loans or consolidate your loans into a Direct Consolidation Loan.

3. Make 120 qualifying payments under an income-driven repayment plan.

How to apply: To apply for PSLF, you’ll need to:

1. Fill out the PSLF form and have your employer certify your employment.

2. Submit the form to the Department of Education.

3. Continue making qualifying payments while working for an eligible employer until you reach 120 payments.

4. Once you’ve made 120 qualifying payments, submit the PSLF application to have your remaining loan balance forgiven.

Deadline: There is no specific deadline for applying for PSLF. However, you must have eligible loans by June 30, 2024 to benefit from the one-time account adjustment.

Related: Are Parent PLUS Loans Eligible for PSLF?

What it is: Biden’s Plan B Forgiveness is a proposed initiative that aims to provide relief to federal student loan borrowers, including those with Parent PLUS Loans, through various measures such as interest waivers, debt forgiveness for long-term borrowers, and targeted relief for those who attended low-financial-value programs. This plan is designed to complement the existing forgiveness programs and provide more support to borrowers who may not qualify for other relief options.

How it works: While the details of Biden’s Plan B Forgiveness are still being finalized, the proposed measures include:

1. Waiving unpaid interest: This provision would eliminate any interest accrued on your federal student loans, including Parent PLUS Loans, giving you a clean slate.

2. Forgiving debt for long-term borrowers: If you have been in repayment for an extended period (e.g., 20-25 years), you may be eligible for loan forgiveness under this plan, regardless of your remaining balance.

3. Providing relief for those who attended low-financial-value programs: If you attended a program that provided a low return on investment or did not lead to gainful employment, you may qualify for targeted debt relief under this plan.

Who qualifies: The eligibility requirements for Biden’s Plan B Forgiveness have not been finalized. However, most federal student loan borrowers, including Parent PLUS loan borrowers, are expected to be eligible for at least some of the proposed relief measures.

How to apply: As the plan is still in the proposal stage, there is no application process yet. Once the details are finalized and the plan is put into practice, the Department of Education will provide guidance on how to apply for the relief measures.

Deadline: There is no set deadline for Biden’s Plan B Forgiveness, as it is still a proposed initiative. But it is expected to be implemented in the coming months, providing more relief to federal student loan borrowers.

Related: Biden-Harris Student Loan Forgiveness

While the recent developments in Parent PLUS Loan forgiveness have the potential to help many borrowers, there are other forgiveness options available that may be applicable in specific situations.

These programs have more stringent eligibility requirements and may apply to a smaller group of borrowers. Still, for those who qualify, they can provide substantial relief, including the potential for complete loan forgiveness.

Total and Permanent Disability Discharge

What it is: TPD Discharge is a federal program that lets you have your Parent PLUS Loans discharged if you become totally and permanently disabled.

Who qualifies: You may qualify if you have a service-connected disability, receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, or have a physician’s certification of your total and permanent disability.

How to apply: To apply, you must complete the TPD Discharge application form and attach the required documentation from the VA, SSA, or a licensed doctor. Submit the completed application and documentation to Nelnet, the servicer that helps the Department of Education administer the TPD Discharge program.

Learn More: What Disabilities Qualify for Student Loan Forgiveness

Borrower Defense to Repayment

What it is: Borrower Defense to Repayment is a federal program that lets you have your Parent PLUS Loans discharged if the school you borrowed money to attend engaged in misconduct or violated certain laws.

Who qualifies: You may qualify if you show the school misled you or engaged in other misconduct violating certain state laws. Common examples include false advertising, misrepresenting job placement rates, or failing to provide the promised educational services.

How to apply: You’ll need to submit a Borrower Defense to Repayment application along with supporting documentation to the Department of Education. You can find the application and more information on the Federal Student Aid website, StudentAid.gov.

Closed School Discharge

What it is: Closed School Discharge is a federal program that lets you have your Parent PLUS Loans discharged if the school you borrowed money for your child to attend closes while they’re enrolled or soon after they withdraw.

Who qualifies: You may qualify if your child’s school closes while enrolled and they do not complete your program because of the closure. You may also qualify if they withdrew from the school less than 120 days before it closed. If your application is approved, your Parent PLUS Loans borrowed to go to the closed school will be discharged, and you may be eligible for a refund of past payments.

How to apply: You’ll need to complete the Closed School Discharge application and submit it to your loan servicer. If your application is approved, your Parent PLUS Loans borrowed to attend the closed school will be discharged, and you may be eligible for a refund of past payments.

Teacher Loan Forgiveness

What it is: Teacher Loan Forgiveness is a federal program designed to encourage individuals to enter and continue in the teaching profession by offering partial loan forgiveness after five years of qualifying teaching service.

Who qualifies: Unfortunately, Parent PLUS loan borrowers do not qualify for the Teacher Loan Forgiveness program. TLF is only available for loans taken out by the student/teacher themselves, such as Direct Subsidized and Unsubsidized Loans.

Why it matters: Many parents of teachers may have heard about TLF and mistakenly believed it could help with their PLUS loans. It’s important to understand that even if your child qualifies for TLF on their own student loans, it won’t affect the Parent PLUS loans you took out on their behalf.

Alternative option: While TLF isn’t available for Parent PLUS loans, PSLF remains an excellent option for parents whose children have become teachers. To pursue this option, you’ll need to consolidate your PLUS loans into a Direct Consolidation Loan and enroll in an income-driven repayment plan.

There is no single “Parent PLUS Loan Forgiveness” application. Your application process depends on the specific program you’re pursuing. Here’s a general guide:

• Determine eligibility: Review forgiveness options for Parent PLUS loans (PSLF, income-driven repayment forgiveness). Check if you meet the basic requirements.

• Consolidate loans: For PSLF or income-driven repayment plans, consolidate your Parent PLUS loans into a Direct Consolidation Loan at StudentAid.gov.

• Choose repayment plan: Select an income-driven repayment plan. Consider the ICR plan or use the “double consolidation” strategy for the SAVE plan.

• Gather documents: Collect income proof, employment certification forms (for PSLF), and any program-specific documents.

• Submit application: Apply through your loan servicer or StudentAid.gov. PSLF applicants should submit the PSLF form annually.

• Continue payments: Keep making payments while your application is processed. For long-term options, continue making qualifying payments.

• Follow up: Check application status regularly. Recertify income and family size annually for income-driven plans. Submit updated employment forms annually for PSLF.

• Keep records: Maintain copies of all correspondence, applications, and payment records.

Remember, specific requirements vary by program. Always refer to official U.S. Department of Education guidelines or consult your loan servicer for the most current information.

If you’re feeling overwhelmed by the complexities of Parent PLUS Loan forgiveness, you’re not alone. The ever-changing landscape of student loan relief can be challenging to keep up with. It’s a full-time job by itself.

If you’re unsure which forgiveness path is right for you, book a 1:1 consultation with one of our experienced student loan lawyers. We’ll take the time to understand your unique situation and help you find the best solution for your needs.