Parents Beware of PLUS Sized Student Loans
Parents can borrow Parent PLUS loans to pay for the education of their dependent children. My husband and I will borrow Parent PLUS loans next year for our daughter's college (unless she runs off to Uruguay, which is distinctly possible).
Direct Parent PLUS loans are technically eligible for Public Service Loan Forgiveness, but not really. Because Parent PLUS loans cannot be repaid under either Income-Based Repayment or Income-Contingent Repayment, you can’t actually make payments on a Parent PLUS loan that count towards Public Service Loan Forgiveness, unless you pay under the Standard 10-year Repayment plan, which won’t leave anything left to forgive.
But a Parent PLUS borrower could choose to consolidate his or her Parent PLUS loans into a Direct Consolidation Loan. The Direct Consolidation Loan that repaid the Parent PLUS loans could then be repaid under ICR (but still can’t be repaid under IBR). What this means is that Parent PLUS Loan borrowers who consolidate those loans into Federal Direct might could (as we say in the South) earn Public Service Loan Forgiveness, if they owed “enough”, didn’t earn “too much”, and met all the requirements.
A couple of special notes of caution for parents with student loans:
- Parent PLUS borrowers are eligible for Public Service Loan Forgiveness based on their own public service, NOT the service of the child on whose behalf they borrowed the loan.
- Parent PLUS borrowers may have borrowed to pay for their own educations AND for their children’s educations (like me!). Be careful! If you include loans you borrowed for yourself in with the Parent PLUS loans you borrowed for your kids, the resulting consolidation loan will NOT be eligible for IBR, and IBR is the shiznit.
Finally, Parent PLUS and Grad PLUS student loans are different. Graduate and professional students can borrow Grad PLUS loans to pay for their own post-graduate education. Direct Grad PLUS loans are eligible for Public Service Loan Forgiveness and can be repaid under the Income-Based Repayment plan. And as always, because ONLY Federal Direct loans are eligible for Public Service Loan Forgiveness; FFEL Grad PLUS loans must be consolidated into Federal Direct to be eligible.
