13/02/2025
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10:11
CSTParent PLUS loans can be a lifeline for families covering college costs, but they also come with a hefty responsibility. With an interest rate of 9.08% for loans disbursed between July 1, 2024, and June 30, 2025, and a loan fee of 4.228%, these federal loans can add up quickly. So, what happens if a parent can no longer afford the payments? Can the debt be transferred to the student or forgiven entirely? Here’s the breakdown.Unfortunately, no. Once a parent takes out a PLUS loan, they are legally responsible for repaying it. Unlike private loans, there’s no option to simply transfer the debt to the student after graduation. The only way to shift the burden is if the student refinances the loan in their name through a private lender, which would mean losing federal protections like income-driven repayment and loan forgiveness options.Yes, but only under specific circumstances. Parent borrowers may qualify for Public Service Loan Forgiveness (PSLF), but there’s a catch. The loan must first be consolidated into a Direct Consolidation Loan before becoming eligible for the Income-Contingent Repayment (ICR) Plan, which is the only income-driven repayment plan available for Parent PLUS loans. Under PSLF, after 120 qualifying monthly payments while working full-time for a government or nonprofit employer, the remaining balance can be forgiven.Other loan forgiveness and discharge options include:Total and Permanent Disability Discharge – If the borrower becomes permanently disabled.Death Discharge – If either the parent borrower or the student for whom the loan was taken out passes away.School Closure Discharge – If the student’s school closes while they’re enrolled or soon after they leave.If the loan has not yet been disbursed, parents can cancel all or part of it by notifying their child’s school. If the loan has already been disbursed, cancellation is still possible within a specific timeframe, which will be outlined in the promissory note and communications from the school.If making monthly payments becomes overwhelming, parent borrowers can explore:Deferment or Forbearance – Temporarily pausing or reducing payments.Extended or Graduated Repayment Plans – Lowering payments by stretching them over a longer period.Parent PLUS loans may be a financial burden, but knowing your options can help you navigate repayment with confidence.
