The only way to get out of paying Parent PLUS Loans is if you qualify for student loan forgiveness programs or you're eligible for discharge. The two main ways to get Parent PLUS Loan Forgiveness are through the Income-Contingent Repayment Plan and the Public Service Loan Forgiveness Program.
There are a lot of options to discharge Parent PLUS Loans, but unless you become disabled or die, most student loan borrowers will never qualify.
Here's how to pursue Parent PLUS Loan forgiveness and discharge.
Income-Contingent Repayment Forgiveness
Each of the income-driven repayment plans offer loan forgiveness after 20 to 25 years, called IDR loan forgiveness. However, until you consolidate, Parent PLUS Loans are not eligible for any of the income-driven repayment plans. Your repayment options are limited to the:
- 10-Year Standard Repayment Plan
- Graduated Plan
- Extended Plan
Consolidating a Parent PLUS Loan into a Direct Consolidation Loan allows you to qualify for the income-contingent repayment plan. Your monthly payment under the ICR Plan will be based on your family size and income for 12 months at a time. Before your last month of payment, you'll need to provide proof of your current income and family size to stay in the plan.
After 25 years of payment under that plan, your remaining loan balance will be forgiven. However, you may have to pay taxes on the forgiven balance. And depending on the interest rate and interest capitalization events, your loan balance may double before its forgiven.
Loan Forgiveness for Public Service
Parents who work in public service can have their Parent PLUS Loans forgiven under the Public Service Loan Forgiveness Program. The parent qualifies for PSLF after they make 120 qualifying payments while working full-time for a qualified employer (local, state, or federal government, or an eligible nonprofit employer).
Qualifying payments are monthly payments made under one of the income-driven repayment plans:
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
Parent PLUS Loans are eligible only for the ICR Plan, but you have to consolidate the Parent PLUS Loans into a Direct Consolidation Loan before they qualify.
Lastly, when you submit your annual recertification for your IDR Plan, you should track your qualifying payments by submitting a PSLF Employment Certification form to your loan servicer.
Parent PLUS Loan Questions
Do Parent PLUS Loans qualify for the CARES Act? Parent PLUS Loans that are owned by the Department of Education qualify for the CARES Act. Likewise, FFEL Parent PLUS Loans that are in default are covered by the Act. However, FFEL Parent Loans in good standing are not covered.
Will Parent PLUS loans be forgiven? If the Biden Administration forgives federal student loan debt, Parent PLUS Loans should be forgiven. Currently, it's unclear if the government will offer loan forgiveness or how much. But if student loans are forgiven, the exact amount of loan forgiveness parents get will be set by federal law.
Do Parent PLUS loans qualify for disability forgiveness? Parent PLUS Loans can be forgiven if the parent borrower becomes totally and permanently disabled, not the child. Likewise, if both parents have Parent PLUS Loans and one becomes disabled, the non-disabled parent remains responsible for their own student loan debt. You can apply for a total and permanent disability discharge (TPD) at disabilitydischarge.com
Can Parent PLUS loans be forgiven for teachers? Teachers cannot have their Parent PLUS Loans forgiven under the Teacher Loan Forgiveness Program. PLUS Loans for Parents and graduate or professional students are ineligible for this type of loan forgiveness.
Another way to get out of Parent PLUS Loans is to have them forgiven due to:
- Bankruptcy: although difficult, student loans can be discharged in bankruptcy by proving undue hardship
- Closed school: the student you borrowed the loan for couldn't finish their degree/certificate because the school closed
- Death: your entire federal student loan balance can be eliminated if you die or the child you borrowed the loan for dies (to get the death discharge, you'll need to provide a death certificate to the loan servicer)
- False certification: you qualify for this loan discharge option if your school falsely certified your eligibility
- Identity theft: someone fraudulently signed your name to the loan
- Unpaid refund: the student you borrowed the loan for withdrew from school, but the school didn't refund the student loan money back to the government
Lastly, student loan refinancing is an option to get a lower interest rate. But refinancing won't transfer the Parent PLUS Loan to your child's name. PLUS, refinancing with a private lender causes you to lose federal benefits like deferment, forbearance, and access to IDR Plans and student loan forgiveness programs.