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How To Get Parent PLUS Loan Forgiveness
Updated On September 12, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
There are two main ways to get Parent PLUS Loan forgiveness. First, you can get Parent PLUS Loan forgiveness through an income-driven repayment plan known as Income-Contingent Repayment (ICR). Second, you can get Parent PLUS Loan Forgiveness through the Public Service Loan Forgiveness program. However, neither option may be the fastest way to pay off Parent PLUS Loans. The fastest way to pay off Parent PLUS Loans is to refinance Parent PLUS Loans. The second fastest way to pay off Parent PLUS Loans is to remain on the Standard Repayment Plan.
In this guide, we will discuss the following:
- How to get Parent PLUS forgiveness through Income-Contingent Repayment (ICR)
- How to get Parent PLUS forgiveness through Public Service Loan Forgiveness
- How to refinance Parent PLUS Loans
- How to discharge Parent PLUS Loans
How to Get Parent PLUS Forgiveness Through Income-Contingent Repayment (ICR)
Income-Contingent Repayment (ICR) is an income-driven repayment plan that can lower your monthly Parent PLUS Loan payments and offer Parent PLUS forgiveness. ICR is the only income-driven repayment plan that is available to Parent PLUS Loan borrowers. Income-Contingent Repayment (ICR) caps your monthly payment at the lesser of:
- 20% of your discretionary income, and
- The amount of your fixed monthly payments on a 12-year repayment term.
When you enroll in ICR, your loan term will become 25 years. This is 15 years longer than the Standard Repayment Term for Parent PLUS Loans, which is 10 years. To enroll in ICR, your must first consolidate your Parent PLUS Loans into a Direct Consolidation Loan. To determine your monthly payment, you must certify your income. Each year, you will recertify your income, which could change your monthly payment.
After 25 years of on-time monthly payments, your remaining Parent PLUS Loan balance will be forgiven. It is important to note that the amount of Parent PLUS Loan forgiveness you receive is subject to income tax.
How to Get Parent PLUS Forgiveness Through Public Service Loan Forgiveness
The Public Service Loan Forgiveness program is a federal program that offers student loan forgiveness to employees who work for the government or a non-profit and make 120 monthly payments. To get Parent PLUS Loan forgiveness, the parent borrower’s employment is what matters; not your child’s employment.
It is important to understand all the requirements of the Public Service Loan Forgiveness program. To qualify for public service loan forgiveness, you must first consolidate your Parent PLUS Loans into a Direct Consolidation Loan. Then, you must make a majority of your loan payments while enrolled in an income-driven repayment plan such as Income-Contingent Repayment (ICR).
Each year or whenever you change employers, you must submit an Employment Certification Form to the U.S. Department of Education. After you complete all 120 monthly payments, you can submit an application for public service loan forgiveness. If you are approved, you will receive student loan forgiveness on your remaining balance. The amount of student loan debt forgiven is not taxable.
This Public Service Loan Forgiveness calculator shows you how much student loan forgiveness you can get with public service loan forgiveness.
How to Refinance Parent PLUS Loans
It can take a long time to get Parent PLUS Loan forgiveness, and your options are limited to Income-Contingent Repayment (ICR) and Public Service Loan Forgiveness. One option to consider is to refinance Parent PLUS Loans.
Can you refinance Parent PLUS Loans? The answer is yes. Like student loan refinancing, you can refinance Parent PLUS Loans to save money, lower your interest rate and pay off debt more quickly. There are two ways to refinance Parent PLUS Loans:
- Refinance Parent PLUS Loans in your name only
- Refinance Parent PLUS Loans in your child’s name
Refinance Parent PLUS Loans in your name only
Refinancing Parent PLUS Loans in your name only is the standard way that borrowers refinance Parent PLUS Loans. When you refinance Parent PLUS Loans, the process is similar to how to refinance student loans. To qualify for Parent PLUS Loan refinancing, you will need good credit, stable and recurring monthly income, and a low debt-to-income ratio. Lenders want to ensure that you can afford your monthly living expenses, plus debt payments for mortgages, student loans and credit cards. When you refinance Parent PLUS Loans, a private lender pays off your existing Parent PLUS Loans, which means you no longer will have the benefits of a federal government loan.
The process to refinance Parent PLUS Loans is simple. You can compare Parent PLUS Loans refinance lenders and then check your new interest rate for free in about two minutes with no impact to your credit score. Then, you can apply online in about 10-15 minutes
Refinance Parent PLUS Loans in your child’s name
Can a Parent PLUS Loan be transferred to the student? Many Parent PLUS Loans borrowers ask whether they can transfer Parent PLUS Loans to their child. The short answer is no, you can’t directly transfer Parent PLUS Loans to a child. However, you can refinance Parent PLUS Loans in your child’s name with certain private lenders. To qualify, the student must qualify for student loan refinancing. That means your child must have good credit (at least 650 or higher), stable and recurring income, and a low debt-to-income ratio.
How to Discharge Parent PLUS Loans
There are certain circumstances when you Parent PLUS Loans can be discharged. They include, among others:
- You, as the Parent PLUS Loan borrower, die
- Your child, for whom you borrowed a Parent PLUS Loan, dies
- You become totally and permanently disabled
- Your Parent PLUS Loans are discharged in bankruptcy
- The school that your child attended closed before your child completed a degree
- The school improperly said you were eligible to receive a Parent PLUS Loan
Parent PLUS Forgiveness: Final Thoughts
While you can get Parent PLUS forgiveness, the options are limited. You can consolidate your Parent PLUS Loans, enroll in Income-Contingent Repayment (ICR), and receive forgiveness after 25 years. Alternatively, you could consolidate your Parent PLUS Loans, enroll in ICR, make 120 monthly payments, and receive Parent PLUS Loan forgiveness after 10 years.
If neither option is appealing, you could remain on the Standard Repayment Plan and pay off Parent PLUS Loans after 10 years. Alternatively, you could pay off your student loans faster when you refinance Parent PLUS Loans.
Refinance With SoFi
