Loan Forgiveness Options for Parent PLUS Loans

Introduction

Parent PLUS loans are a popular option for parents who want to help their children finance their college education. However, these loans can be a significant financial burden for parents, especially if they are struggling to make ends meet. Thankfully, there are loan forgiveness options available for Parent PLUS loans that can provide relief for eligible borrowers.

Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness program is a federal program that forgives the remaining balance on eligible Direct Parent PLUS loans after the borrower has made 120 qualifying payments while working full-time for a qualifying employer. Qualifying employers include government organizations, non-profit organizations, and certain other public service organizations.

To be eligible for PSLF, borrowers must make their payments through an income-driven repayment plan, such as the Income-Based Repayment (IBR) plan or the Pay As You Earn (PAYE) plan. These plans base the borrower’s monthly payment amount on their income and family size, making the payments more affordable for borrowers.

Teacher Loan Forgiveness

Teachers who have taken out Parent PLUS loans may be eligible for the Teacher Loan Forgiveness program. Under this program, qualified teachers who have taught full-time in a low-income school or educational service agency for five consecutive years may be eligible for forgiveness of up to $17,500 on their Direct Parent PLUS loans.

To qualify for Teacher Loan Forgiveness, teachers must meet certain requirements, such as holding a full-time teaching position in a qualifying school or educational service agency, and teaching in a subject area that aligns with the needs of the school or educational service agency.

Income-Driven Repayment Forgiveness

Income-driven repayment plans, such as IBR, PAYE, and Revised Pay As You Earn (REPAYE), can provide loan forgiveness for Parent PLUS loans after a certain number of years of repayment. Under these plans, borrowers make payments based on their income and family size, and any remaining balance on the loan after a certain period of time (usually 20 or 25 years) is forgiven.

It’s important to note that under an income-driven repayment plan, the forgiven amount may be considered taxable income. Borrowers should consult with a tax professional to understand the potential tax implications of any loan forgiveness.

Conclusion

Loan forgiveness options for Parent PLUS loans can provide much-needed relief for parents who are struggling to repay their loans. Whether through the Public Service Loan Forgiveness program, Teacher Loan Forgiveness, or income-driven repayment forgiveness, there are options available to help borrowers reduce or eliminate their loan debt.

If you have Parent PLUS loans, it’s important to explore these forgiveness options and determine which one may be the best fit for your financial situation. Remember to stay on top of the requirements and deadlines for each program, and don’t hesitate to reach out to your loan servicer or a trusted financial advisor for guidance.