Parent PLUS Loan Forbearance: Pros, Cons, and Alternatives

• Even though forbearance pauses your payments, interest continues to accumulate, which can increase your total loan balance and future monthly payments.

• By consolidating Parent PLUS Loans twice, you can access more favorable income-driven repayment plans like IBR, PAYE, or SAVE, which could lower your monthly payments and make forgiveness more attainable.

• You can still make payments while in forbearance, which can reduce how much interest builds up and keep your loan balance from growing too much.

If you’re feeling buried under the weight of Parent PLUS Loans, you’re not alone. Whether you’re a parent trying to manage the monthly payments as you approach retirement or a recent graduate struggling to help your family while staying afloat financially, it’s natural to wonder if forbearance is the right move.

You might be asking yourself:

• Will forbearance provide the short-term relief we need without making things worse later?

• Can we manage these loans without risking our retirement, credit, or financial security at risk?

The truth is that forbearance can offer some breathing room—but it’s not without long-term consequences. Interest continues to pile up, making the loan even more expensive down the road.

Before you decide if this option is right for you, we’ll break down exactly what forbearance means for Parent PLUS Loans, how it affects your loan balance, and whether there are better alternatives.

Related: Transfer Parent PLUS Loan to a Student?

Forbearance is a temporary pause on your Parent PLUS Loan payments, typically used when you’re facing financial hardship. It’s a way to get some short-term relief, but forbearance doesn’t erase your debt—it only postpones payments.

There are two main types of forbearance for Parent PLUS Loans:

• Voluntary Forbearance: You apply for this when you need a break from payments, usually due to financial struggles.

• Automatic Forbearance: This can happen without applying, such as during the COVID-19 relief period.

No matter which forbearance you choose, accepting a forbearance should not affect your credit score. It’s not a late payment. You’re still in good standing. Your payments are just on hold.

Related: What Is An Administrative Forbearance?

As a Parent PLUS Loan borrower, you might be able to get a forbearance if you are:

• Experiencing financial difficulties, such as medical expenses or changes in income

• Serving in AmeriCorps

• Performing service that would qualify you for partial loan forgiveness through the U.S. Department of Defense

• Working in a medical or dental internship or residency

• Serving in the National Guard

• Have student loan payments that are high in relation to your income

• Working as a teacher to qualify for Teacher Loan Forgiveness

Keep in mind that there are eligibility requirements for all types of forbearance, and you will need to submit documentation to apply. You can learn more about eligibility and the types of forbearance available on the Federal Student Aid website.

Forbearance might give you breathing room now, but it comes with a long-term price. The key issue is interest accumulation—even though you’re not making payments, interest keeps adding up. And once your forbearance period ends, that accrued interest gets added to your principal balance.

Here’s what this looks like:

• Interest Adds Up Fast: If you owe $50,000 at a 6.2% interest rate and put your loan in forbearance for one year, you’ll rack up around $3,100 in interest. When forbearance ends, that $3,100 gets added to your principal, making your loan balance $53,100.

• Higher Future Payments: With a bigger loan balance, your monthly payments will likely increase, and you’ll end up paying more over time—even though forbearance might seem like a good short-term fix.

The hidden cost of forbearance is that it doesn’t reduce what you owe—it only postpones it and makes the loan more expensive in the long run. That’s why it’s crucial to carefully consider if forbearance is the best option for your financial situation.

Related: What Is Capitalized Interest On a Student Loan?

Forbearance can help in specific situations, but it’s best to use it carefully.

When Forbearance Might Be the Right Choice

• Temporary Financial Hardship: If you’ve recently lost your job, faced unexpected medical expenses, or have another short-term financial emergency, forbearance can give you some breathing room until you get back on your feet.

• Avoiding Immediate Default: If you’re close to missing payments and risking default, forbearance can prevent your loan from going into collections, damaging your credit, or leading to wage garnishment.

These situations make forbearance a useful short-term tool. But it shouldn’t be relied on long-term.

When Forbearance Might Make Things Worse

• Prolonging the Problem: If your financial struggles are long-term, forbearance only delays the issue. Interest continues to add up, and your debt could be even larger when the forbearance ends. If you’re unsure whether your financial hardship is temporary or not, it’s worth exploring other repayment plans to see if they could offer relief without accumulating more interest.

• Better Long-Term Options Available: Options like income-driven repayment (IDR) plans or consolidation can lower your monthly payments in a way that’s more sustainable, without growing your debt. Unlike forbearance, IDR plans base payments on your income and could reduce them significantly.

Related: Are Parent PLUS Loans Eligible for SAVE?

Forbearance is one option you can use when you can’t pay your Parent PLUS Loans, but it’s not always the best one for you. While it pauses your payments, it doesn’t reduce your overall debt and can lead to higher costs in the long run.

Fortunately, there are other options that could lower your payments and help you manage your debt more effectively. Let’s explore those alternatives:

Income-Driven Repayment Plans

IDR plans base your monthly payment on your income and family size, often lowering the amount you owe each month. While Parent PLUS Loans are only eligible for the Income-Contingent Repayment plan by default, there’s a way to access more favorable IDR plans through the double consolidation loophole.

With this strategy, you can consolidate your Parent PLUS Loans twice, which unlocks access to plans like Income-Based Repayment (IBR), Pay As You Earn (PAYE), or the Saving on a Valuable Education (SAVE) Plan. These plans can lower your monthly payment, making it easier to manage your debt over time, especially if you’re dealing with financial hardship.

While the double consolidation process can take some time and involve paperwork, many parent borrowers find it’s worth the effort for the long-term savings.

Loan Consolidation

Consolidating your Parent PLUS Loans can simplify your payments by combining multiple loans into one. Consolidation can also help extend your repayment term, lowering your monthly payments. As we shared above, it can also offer more repayment options beyond the 10-Year Standard Repayment Plan.

After consolidating into a Direct Consolidation Loan, you can apply for ICR, or if you did the double consolidation loophole, you could qualify for plans like SAVE. If those IDR plans are still too expensive, you can choose Extended or Graduated Repayment Plans, which offer lower monthly payments.

While consolidation may reduce your monthly payments, it can increase the total interest you pay over time. But if you’re working toward loan forgiveness programs like Public Service Loan Forgiveness (PSLF) or IDR forgiveness, the extra interest isn’t as big of a concern since your remaining balance could be forgiven.

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

Related: Should You Consolidate Parent PLUS Loans?

Deferment

Deferment is another option that pauses your loan payments, similar to forbearance. The difference is that in some cases, interest doesn’t accrue during deferment (such as during economic hardship deferment).

Deferment may be a better option than forbearance if you qualify, but like forbearance, it’s usually a temporary solution. Compared to consolidation or IDR plans, deferment doesn’t provide a long-term solution, but it could help if you’re facing short-term financial issues.

If you decide that forbearance is the right choice for your situation, the process is fairly straightforward. But there are a few steps you’ll need to follow to ensure everything goes smoothly.

1. Contact Your Loan Servicer: The first step is to reach out to your federal student loan servicer. You can do this online, by phone, or through their customer service portal. Your loan servicer will guide you through the available forbearance options and help you decide which one applies to your situation (voluntary or mandatory forbearance).

2. Submit the Forbearance Request: You’ll need to complete a forbearance request form provided by your servicer. This form asks for information about your financial situation, and in some cases, you may need to provide documentation, like proof of income or medical bills, to support your request.

3. Approval and Terms: Once you submit your request, your servicer will review it and either approve or deny the forbearance. If approved, they’ll provide you with the terms, including how long the forbearance lasts and what your responsibilities are once it ends. Be sure to understand how much interest will accrue during this period.

4. Keep Making Payments Until Approved: Until your forbearance is officially approved, you’re still responsible for making your regular monthly payments. If you can’t make a full payment during this waiting period, consider reaching out to your servicer to ask about short-term relief options or making a partial payment to avoid delinquency. Keep communication open with your servicer if you’re struggling to make payments while waiting for approval.

5. Monitor Your Account: After forbearance is granted, check your loan balance and ensure the interest is tracked properly. Keep all documentation and communication from your servicer for future reference. You’ll also want to make a note when your forbearance ends so you’re prepared to resume payments or explore other options.

Managing Parent PLUS Loans can feel overwhelming, especially when you’re trying to balance short-term relief with long-term financial health. While forbearance is one option, alternatives like income-driven repayment and the double consolidation loophole might offer more sustainable solutions.

If you’re unsure about your next step, our team of student loan experts can provide the support and guidance you need to make the best decision for your financial future. You can book a consultation with no pressure—just expert advice to help you move forward confidently.