Parent PLUS loan forgiveness is possible via Public Service Loan Forgiveness and Income-Contingent Repayment.
Updated Oct 7, 2021 · 1 min read Written by Anna Helhoski Senior Writer Anna Helhoski
Senior Writer | Economic news, consumer finance trends, student loan debt
Anna Helhoski is a senior writer covering economic news and trends in consumer finance at NerdWallet. She is also an authority on student loans. She joined NerdWallet in 2014. Her work has appeared in The Associated Press, The New York Times, The Washington Post and USA Today. She previously covered local news in the New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's degree in journalism from Purchase College, State University of New York.
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Des Toups was a lead assigning editor who supported the student loans and auto loans teams. He had decades of experience in personal finance journalism, exploring everything from car insurance to bankruptcy to couponing to side hustles.
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There are two main ways to get parent PLUS loan forgiveness: through the Public Service Loan Forgiveness program and through the Income-Contingent Repayment plan.
Public Service Loan Forgiveness involves a lot of red tape but is the better option if you qualify. Income-Contingent Repayment forgiveness takes a long time. Stick to the standard 10-year plan to repay parent PLUS loans if you can afford to. It’s faster and will likely cost less overall.
If you do want to pursue parent PLUS loan forgiveness, here’s how.
Public Service Loan Forgiveness is available to all federal student loan borrowers, including parent PLUS loan holders, who make 120 qualifying payments while working full time in a government position, or for an eligible nonprofit employers.
Only payments made on the standard and income-driven repayment plans qualify for PSLF. Because the standard plan pays off the loan in 120 payments, parent PLUS borrowers aiming for PSLF should enroll in the Income-Contingent Repayment plan (see below for how to do this). Parent PLUS borrowers do not qualify for the limited PSLF waiver through Oct. 31, 2022 that includes loan payments made on other repayment plans.
If you'll qualify for forgiveness, skip the parent PLUS loan deferment so you start making eligible payments right away.
You should complete a PSLF Employment Certification form annually, or whenever you change employers. After all qualifying loan payments are complete, you can submit an application . Once approved, the remainder of your parent PLUS loans will be forgiven tax-free.
Income-Contingent Repayment , or ICR, is the only income-driven repayment plan available to parent PLUS borrowers. It's the best option for parent PLUS borrowers who can't afford their payments in the long term.
ICR caps payments at 20% of your discretionary income or the amount of your fixed monthly payments on a 12-year loan term, whichever is lower. ICR also extends your loan term from 10 years to 25 years.
To enroll, you have to consolidate parent PLUS loans into a federal direct consolidation loan, then contact your loan servicer to get on an ICR plan. You must recertify your financial information annually, which may change your monthly payments.
After 25 years of repayment, any remaining balance is forgiven. But that amount is taxable income , adding to your total bill. Use the government’s Loan Simulator to calculate ICR payments and how much forgiveness you might receive; it may cost less to stick with the standard plan if you can afford the payments.
There are a few other circumstances that could cause your parent PLUS loans to be discharged:
Death discharge : You die or the child you borrowed for dies. Total and permanent disability discharge : You become totally and permanently disabled. Bankruptcy: You can prove undue hardship and get your loans discharged through bankruptcy.Closed school discharge : The student you borrowed for couldn’t finish a degree because the school closed.
Borrower Defense to Repayment : The student you borrowed for can prove their school defrauded them. The school falsely certified your eligibility to receive the loan. Cases of identity theft in which your eligibility to receive the loan was falsely certified.The student you borrowed for withdrew from school, but the school didn’t refund your loan money it was legally required to repay.
However, if you have already consolidated your parent PLUS loan — in order to pursue PSLF or enroll in an income-contingent plan, you will forfeit all ability to get your loans discharged in case of the death of the student you borrowed for; closed school discharge; and borrower defense.
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Anna Helhoski is a senior writer covering economic news and trends. Her work has appeared in The Associated Press, The New York Times, The Washington Post and USA Today. See full bio.
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