Who Is Responsible for Paying Parent PLUS Loans?

• You can choose to help with Parent PLUS loan payments voluntarily, but you are not legally obligated to do so.

• Refinancing the loan may be an option, but if you assume the loan, you should be aware of the financial implications.

• Understanding the difference between voluntary contributions and legal responsibility is crucial for managing loan repayment effectively.

The parent borrower who took out the Parent PLUS loan is solely responsible for repaying it. The other parent or spouse is not obligated to repay the loan unless they also signed for it. But students may choose to help with payments if they wish. Although students aren’t legally required to repay the loan, their voluntary support can ease the financial burden for parents.

While the Parent PLUS loan is legally the responsibility of the parent, students can choose to help repay the loan if they wish. This voluntary support can significantly ease the financial burden for parents, but there are also options to shift the loan responsibility.

Voluntary Payments

Students can contribute to Parent PLUS loan payments. While not legally required, this is a common approach for families who want to share the burden. But if a student wants to take on more responsibility, there are options to transfer or refinance the loan.

Alternative Repayment Options

Parents and students have the option to refinance the Parent PLUS loan or transfer the loan responsibility through private lenders. Here are two ways to explore these options:

1. Can You Refinance a Parent PLUS Loan? If the goal is to reduce interest rates or shift the loan to the student’s name, refinancing might be a good solution. Refinancing allows the student to assume the loan under their name, provided they meet the lender’s credit and income requirements. For a detailed guide on how refinancing works and the benefits it offers, read our full article on refinancing Parent PLUS loans.

2. Can You Transfer a Parent PLUS Loan to a Student? While transferring a Parent PLUS loan to a student isn’t possible under federal loan regulations, there are workarounds through private refinancing. To learn more about how this process works and whether it’s right for your family, read our complete guide on transferring Parent PLUS loans to a student.

1. Parent PLUS Loans Are Just Like Regular Student Loans

Many people mistakenly believe that Parent PLUS loans have the same terms and conditions as federal student loans taken out by students.

In reality, Parent PLUS loans are solely the responsibility of the parent borrower.

These loans also have different repayment terms, including higher interest rates and the lack of eligibility for income-driven repayment plans, which are available to students with federal student aid.

2. Responsibility Can Be Easily Transferred to the Student

A common misconception is that the responsibility for Parent PLUS loans can be transferred to the student. But unless the loan is refinanced into the student’s name, the legal responsibility remains with the parent borrower.

The loan servicer will continue to handle the payments under the parent’s account unless a successful refinancing occurs.

While some private lenders offer options for refinancing into the student’s name, this requires the student to meet specific credit history and income qualifications.

3. Both Parents Are Responsible If Only One Took Out the Loan

Some believe that if one parent takes out a Parent PLUS loan, the other parent or spouse is automatically responsible for repaying it.

But only the parent who signed the Master Promissory Note is obligated to repay the loan.

The other parent or spouse is not legally required to contribute, unless they cosigned or took additional steps to assume the loan.

4. Students Are Required to Help Repay the Loan

It’s commonly believed that students are legally obligated to assist in repaying Parent PLUS loans. In reality, students are not legally responsible for repaying the loan unless the loan has been refinanced into their name.

But students can make voluntary contributions to help with the monthly payment, which can ease the financial burden on the parent borrower.

5. Parent PLUS Loans Have the Same Repayment Options as Other Federal Loans

Some assume that Parent PLUS loans offer the same range of repayment options as other federal student loans, such as access to income-driven repayment plans or easy consolidation.

In truth, Parent PLUS loans are not eligible for most income-contingent repayment plans unless the loans are first consolidated into a Direct Consolidation Loan.

But options like deferment, forbearance, and loan consolidation are available to help parents manage their payments, but they don’t transfer the responsibility to the student.

Related:

• Can’t Pay Parent PLUS Loans?

• Parent PLUS Loan Deferment

• Parent PLUS Loan Forbearance

Clearing up these misconceptions can help parents and students better manage their Parent PLUS loans and avoid unnecessary stress.

If you’re struggling with loan repayment or want to explore options like consolidation or refinancing, consult your loan servicer or speak with a student loan expert to determine the best path forward.

Book a call with us to discuss your circumstances and explore solutions that might work for you.