Can Parent PLUS Loans Be Consolidated With Student Loans?

Yes, Parent PLUS Loans can be consolidated with other federal student loans.

Traditionally, consolidating Parent PLUS Loans with other student loans is not advised. This is because it restricts your eligibility for more useful income-driven repayment plans. After consolidation, your new Direct Consolidation Loan would qualify only for the Income-Contingent Repayment (ICR) Plan, which generally results in higher monthly payments compared to other IDR Plans.

But the landscape is changing – at least temporarily, until July 1, 2025.

The Department of Education now allows a technique known as the double consolidation loophole for enrollment in the SAVE Plan. Additionally, completing this process before April 30, 2024, provides access to a special program that expedites progress towards IDR plan loan forgiveness.

Consolidating your Parent PLUS Loans with your other federal student loans now gives you access to two powerful, but temporary opportunities that can lower your monthly payments and fast-forward your progress toward loan forgiveness.

I’ve used this exact process in the past year to not only help Parent PLUS Loan borrowers get an affordable payment plan, but my team and I have also helped some get their remaining loan balance forgiven years faster than they originally planned.

Here’s how this works.

Access to the Income-Driven Repayment (IDR) Waiver

First, consolidating your loans makes them eligible for the Income-Driven Repayment Waiver. This waiver is a unique, temporary change by the Department of Education that allows various repayment periods, including forbearance or deferment, to count towards loan forgiveness.

For borrowers with Parent PLUS Loans and other student loans, this could significantly accelerate your progress toward loan forgiveness under both IDR plan forgiveness and the Public Service Loan Forgiveness (PSLF) Programs.

Watch this video to see how it works.

Leveraging the Double Consolidation Loophole

Second, consolidation opens the door to the double consolidation loophole. While detailed specifics are covered in another article, it’s important to understand that this loophole can dramatically reduce your monthly payments. By consolidating your loans twice, you gain eligibility for more favorable repayment plans, such as the SAVE Plan, which was previously inaccessible with standard Parent PLUS Loans.

Related: Parent PLUS Loan SAVE Plan

These opportunities are not permanent. The deadline to consolidate for the IDR Waiver is April 30, 2024, and the window for the double consolidation loophole closes on July 1, 2025.

To maximize your forgiveness credit while getting lower monthly payments, you need to start the consolidation process ASAP. Remember it takes student loan servicers about 4 to 6 weeks to process each loan application.

You can consolidate for free on the Federal Student Aid website, StudentAid.gov.

You can consolidate these types of Parent PLUS Loans with other federal student loans:

• FFEL Parent PLUS Loans: Loans issued under the Federal Family Education Loan (FFEL) Program.

• FFEL Consolidation Loans that paid off Parent PLUS Loans: Consolidation loans under the FFEL Program specifically used to pay off Parent PLUS Loans.

• Direct Parent PLUS Loans: Loans issued directly by the U.S. Department of Education.

• Direct Consolidation Loans that paid off Parent PLUS Loans: Federal consolidation loans that have been used to pay off Direct Parent PLUS Loans.

Each of these loan types can be combined with other federal student loans, offering flexibility in managing your student loan debt.

• No Credit Check: The Education Department doesn’t check your credit score or personal finances before approving your consolidation application.

• Interest Rate: The rate for your new consolidation loan will be based on the weighted average of the interest rates of your current loans.

• Repayment Term: The repayment term for the new loan will depend on the repayment plan you choose and loan balance. For example, if you choose the SAVE or ICR Plan, your term is 25 years. But if you chose the Extended or Graduated plans, your term can be from 10 to 30 years.

• Not Refinancing: Parent PLUS Loan Consolidation keeps your loans with the federal government. Refinancing moves your loans to a private lender. You might get a lower interest rate if you refinance, but you’ll lose federal protections and access to income-based loan repayment options and student loan forgiveness programs.

Related: Parent PLUS Loan Repayment Options

Now is the prime time to consolidate your Parent PLUS Loans with your federal student loans, unlocking paths to lower payments and faster loan forgiveness. The consolidation process can be complex, but you need not do it alone. Our team is ready to guide you towards the best strategy for your loans.

Book a call with us. Let us help you make the most of these opportunities.