When it comes to financing higher education, many parents turn to federal Parent PLUS loans to bridge the financial gap. While these loans offer valuable support, the repayment burden can be overwhelming. Fortunately, there is a potential solution: Parent PLUS loan, forgiveness. In this comprehensive guide, we will delve into the details of Parent PLUS loan forgiveness, eligibility requirements, and the various programs available to provide relief to deserving borrowers. Read more
Understanding parent plus loan forgiveness:
Parent plus loan forgiveness are federal loan available to parents of dependent undergraduate students. These loan allow to parents for borrow money to cover the cost of their child’s education. However, unlike other federal student loans, Parent PLUS loans are not eligible for some popular forgiveness programs like Public Service Loan Forgiveness (PSLF).
Parent PLUS Loan Forgiveness Programs:
Income-Contingent Repayment (ICR):
The Income-Contingent Repayment plan is one option that offers potential forgiveness for Parent PLUS loans. Under this program, borrowers can repay their loans based on their income and family size. After making regular payments for 25 years, any remaining loan balance may be forgiven. However, it is important to note that the forgiven amount will be considered taxable income.
Income-Based Repayment (IBR):
Parent PLUS loan borrowers may also qualify for the Income-Based Repayment plan. This plan calculates monthly payments based on income and family size, and after making payments for 25 years, any remaining balance may be forgiven. As with the ICR plan, the forgiven amount will be subject to taxes. Read more
Public Service Loan Forgiveness (PSLF):
While Parent PLUS loans themselves are not eligible for PSLF, there is a potential workaround. If parents consolidate their Parent PLUS loans into a Direct Consolidation Loan and choose an income-driven repayment plan, they can become eligible for PSLF. By making 120 qualifying payments while working full-time for a qualifying employer, borrowers may have their remaining loan balance forgiven.
Death or Disability Discharge:
In unfortunate circumstances such as the death or permanent disability of the borrower, Parent PLUS loans can be discharged. This discharge relieves the borrower’s family of the responsibility to repay the loan. Read more
Eligibility Criteria:
To be eligible for Parent PLUS loan, forgiveness, certain criteria must be met:
Enroll in an eligible repayment plan: Borrowers must be enrolled in one of the income-driven repayment plans mentioned earlier.
Make consistent payments: Timely and consistent payments must be made for the required period, typically 25 years.
Work for a qualifying employer: For PSLF eligibility, parents must work full-time for a qualifying employer while making the 120 qualifying payments.
Demonstrate financial need: Most Parent PLUS loan, forgiveness programs require borrowers to demonstrate financial need through their income and family size. Read more
Frequently Asked Questions (FAQs) about Parent PLUS Loan Forgiveness:
Can Parent PLUS loans be forgiven through the Public Service Loan Forgiveness (PSLF) program?
Parent PLUS loans themselves are not eligible for forgiveness through the PSLF program. However, there is a potential workaround. If parents consolidate their Parent PLUS loans into a Direct Consolidation Loan and choose an income-driven repayment plan, they can become eligible for PSLF. By making 120 qualifying payments while working full-time for a qualifying employer, borrowers may have their remaining loan balance forgiven.
Is Parent PLUS loan, forgiveness automatic after a certain period of time?
No, Parent PLUS loan, forgiveness is not automatic. Borrower must actively enroll in and make payments under an eligible repayment plan for the required period to be considered for forgiveness.
Shell I have to pay taxes on the forgiven amount?
Yes, any amount forgiven under income-driven repayment plans, such as Income-Contingent Repayment (ICR) or Income-Based Repayment (IBR), is considered taxable income. This means that you may have to pay taxes on the amount forgiven in the year it is forgiven.
What happens if the borrower of a Parent PLUS loan passes away or becomes permanently disabled?
In the unfortunate event of the borrower’s death or permanent disability, the Parent PLUS loan can be discharged. This means that the borrower’s family will not be responsible for repaying the loan.
Can a Parent PLUS loan be transferred to the child to take advantage of forgiveness programs?
No, Parent PLUS loans cannot be transferred to the child. The responsibility for repayment rests solely with the parent who took out the loan.
Are there any other forgiveness options available for Parent PLUS loans?
Apart from the income-driven repayment plans mentioned earlier, there are currently no other specific forgiveness options available for Parent PLUS loans. However, it’s important to stay updated on any changes to loan forgiveness programs and eligibility criteria as they may evolve over time.
Can I apply for Parent PLUS loan forgiveness if I have already paid off the loan?
Loan forgiveness programs typically apply to borrowers who have made consistent payments for the required period and have a remaining loan balance. If you have already paid off your Parent PLUS loan, you would not be eligible for forgiveness.
Conclusion:
Parent PLUS loan, forgiveness can provide significant relief to parents who have shouldered the burden of financing their child’s education. Although Parent PLUS loans are not directly eligible for forgiveness, programs like Income-Contingent Repayment, Income-Based Repayment, and the potential workaround with Public Service Loan Forgiveness offer avenues for loan forgiveness. It is crucial for parents to explore these options, understand the eligibility criteria, and make informed decisions regarding their repayment strategies. By doing so, they can alleviate the financial strain and achieve greater financial stability for themselves and their families.
