Direct PLUS loans for Parents, also known as parent PLUS loans, are the only federal student loans available to parents of college students. These are identical to other federal student loans, but the choices for forgiveness are limited. If you have a parent PLUS loan, you can only seek student debt forgiveness through Public Service Loan Forgiveness or the Income-Contingent Repayment plan. Each option has certain conditions, such as completing 120 payments or working for a qualifying job. Depending on the circumstances, student loan discharge is an option for borrowers who do not qualify for forgiveness. However, this option has its own set of standards that must be completed.
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Parent PLUS loan forgiveness options
Table of Contents
1. Income-Contingent Repayment Plan
The Income-Contingent Repayment (ICR) Plan is a type of income-driven repayment plan. These plans base your monthly payments on your income and household size, and anyone can qualify for the ICR Plan, regardless of income. For the ICR Plan, your monthly payments are equal to 20 percent of your disposable income divided by 12 or what you’d pay on a repayment plan with a fixed payment over the course of 12 years, based on your income. You’ll make payments for 25 years after which, the remaining balance on your student loans is forgiven. Since monthly payments depend on income and family size, you must recertify every year and supply current income information for your payment amount to be adjusted. If your income changes before your annual recertification, you can present income verification to your loan servicer so that your payment amount can be adjusted.
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2. Public Service Loan Forgiveness
Parent borrowers are eligible for Public Service Loan Forgiveness (PSLF). You must meet the following requirements:
- Work full-time for an eligible employer, such as the government or a non-profit.
- Use the Income-Contingent Repayment Plan to repay your loans.
- Make a total of 120 eligible payments (these do not have to be consecutive and extra payments do not count toward the 120 qualifying payments).
There is no requirement that you hold a specific job title at your eligible employer. You only need to work for one that provides PSLF. You can work for the federal, state, local, or tribal governments, as well as for a nonprofit organization. Military service is also acceptable. You can renew your PSLF certification every year to prove that you are still qualified for PSLF and on track to earn forgiveness. When you’re ready, you can submit your forgiveness application.
3. Discharge ( Parent PLUS loan)
Aggravating life circumstances can result in student loan cancellation. While it is not the same as student loan forgiveness, it will eliminate some or all of your student loan debt. Your student loans may be discharged in the following circumstances:
- Bankruptcy.
- Death.
- School closing.
- Total and permanent disability.
Although student loans are dischargeable in bankruptcy, this is uncommon. If your child’s school improperly certified your eligibility for the loan, your loan is falsely certified due to identity theft, or your child withdraws from school and the institution does not refund the loan money, you may be eligible for a debt discharge.
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The bottom line
The forgiveness of PLUS loans is limited, but possible. Even if your PLUS loan is not qualified for a program, borrowers have witnessed significant changes to student loan repayment and forgiveness programs in recent years, allowing for more debts to be forgiven. But, it may only be a matter of time before you qualify for forgiveness and are fully free of this obligation.
