There are two main ways for parents to get loan forgiveness for their PLUS loans: through an income-contingent repayment plan or through Public Service Loan Forgiveness.
But one takes a lot of time, and the other involves a lot of red tape.
And neither may be the best option for getting rid of your parent PLUS loans. If you can afford the payments, you’re better off sticking with the standard 10-year repayment plan. It’s fastest and will incur the least amount of interest.
If you do want to pursue parent PLUS loan forgiveness, here’s how.
How to get loan forgiveness with income-contingent repayment
Income-contingent repayment, or ICR, is the only income-driven repayment plan available to parent PLUS borrowers. It caps your 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 will also extend your loan term from 10 years to 25 years.
Find out what your monthly payments might be on an ICR plan using the government’s repayment estimator.
To enroll, you’ll first have to consolidate your PLUS loans into a federal direct consolidation loan, then contact your loan servicer to get on an ICR plan. You must apply each year to update your financial information, which may change your monthly payments.
After 25 years of repayment, the remainder of your loans is forgiven. The amount forgiven is considered taxable income.
How to get parent PLUS Public Service Loan Forgiveness
Public Service Loan Forgiveness is available to all federal student loan borrowers, including PLUS loan holders, who make payments while working full time in a government position, or for qualifying nonprofit employers.
To be eligible, you first must make 120 qualifying loan payments while on an income-driven plan. For parent PLUS borrowers, that means consolidating your PLUS loans into a federal direct consolidation loan and enrolling in an income-contingent repayment plan.
You must 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 loans will be forgiven tax-free.
Other ways your parent PLUS loans may be discharged
There are a few other circumstances that could cause your parent PLUS loans to be discharged:
- You die or the child you borrowed for dies.
- You become totally and permanently disabled.
- Your loan is discharged in bankruptcy.
- The student you borrowed for couldn’t finish a degree because the school closed.
- 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.