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Q: What are the deferment and repayment options for Parent Plus Loans?

May 14, 2020

Federal Parent Plus loans are eligible for three repayment plans:

  1. Standard Repayment
  2. Graduated Repayment
  3. Extended Repayment

They also can be eligible for the income-contingent repayment plan if you consolidate them into a federal Direct Parent Plus Consolidation loan.

The ICR plan will give you a monthly payment based on your income and family size. Your monthly loan payments under that plan can be as low as $0.

Can I refinance a Parent Plus Loan?

Refinancing is an option for a Parent Plus Loan to get a lower interest rate or better loan repayment terms.

Related: What is a Parent Plus Loan

You won’t, however, be able to transfer the parent loan to your child. The only way to do that is for your child to get a loan in their name and pay off the balance.

The problem, of course, is that your child needs to have a great credit score to get past a credit check or else they won’t be able to get the loan without a cosigner.

Be careful about changing your federal loan to a private student loan: you’ll lose eligibility for repayment plans based on your income and loan forgiveness programs.

Can Parent Plus loans be deferred?

You can get a deferment or a forbearance for a Parent Plus loan. There is a limit, however, to the months of forbearance and deferment that can be applied to your account.

At some point, you may run out of either one. And when that happens, the only option left is to try and get a lower monthly payment.

Your parent loans are put in deferment while your child is enrolled half-time or full-time. You’ll enter repayment once they drop below half-time enrollment.

Should I defer my Parent Plus Loan?

You should request a deferment or forbearance only if you absolutely cannot afford your monthly payment amount. A deferment/forbearance can cause the interest that’s accrued to be added to your loan debt. Depending on your interest rate, your balance can balloon quickly.

Flat lay of Parent Plus loan deferment application.

Download Parent Plus Loan
Deferment Request Form

What happens if you don’t pay a Parent Plus loan?

When you don’t pay a Parent Plus loan you risk student loan default. If you default on a federal loan, you’re at risk of:

  • administrative wage garnishment
  • tax refund offset
  • social security benefit offset
  • credit score decrease

Read Full Article: When You’re Staring at Parent Plus Loan Default Here’s What to Do

How can I get out of paying my Parent Plus Loan

The only way to get out of paying your Parent Plus Loans is to get your loans canceled due to you being totally and permanently disabled.

Read Full Article: The 2 Best Options for Parent Plus Loan Forgiveness

Other than loan cancellation and loan forgiveness, there’s no other way to get rid of federal student loans. There’s no statute of limitations for federal student loans. As a result, your Parent Plus loan will stay with you until you pay it off or die, whichever comes first.

FAQ

  • Are Parent Plus loans eligible for IBR?

    Parent Plus loans are not eligible for IBR, PAYE, or REPAYE. They are, however, eligible for the income-contingent repayment plan (ICR). To qualify, you must consolidate the Parent Plus loan into a Direct Consolidation loan.

  • Do Parent Plus loans have to be paid back immediately?

    You do not have to pay Parent Plus loans back immediately. The loans will be put in deferment while your child is enrolled at least half-time. Once they drop below half-time enrollment, your loan will enter repayment.

  • How are Parent Plus loans paid back?

    The parent is responsible for paying back the Parent Plus loan. So while your child may have agreed to repay the loan on your behalf, it remains your responsibility. The only way the loan becomes your child’s legal responsibility is if they get a loan to pay if off.

  • Can a student pay back a Parent Plus loan?

    A student can pay back a Parent Plus loan. But they cannot consolidate the loan into their own federal student loan debt. The only way for a student to transfer the loan to their name is for them to borrow a private loan to pay off the parent loan.

  • Are both parents responsible for a Parent Plus loan?

    Only the parent who borrowed the Parent Plus loan is responsible for paying it back.

  • Are Parent Plus loans eligible for loan forgiveness?

    The Department of Education offers three loan forgiveness programs for Parent Plus loans:

    • Public Service Loan Forgiveness
    • Income-Driven Repayment Plan Forgiveness

    Loan forgiveness under the PSLF program is tied to the parent borrower. That means the parent borrower has to be the one that works for the government or a nonprofit employer.

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