What happens to a parent PLUS loan if the parent dies?
If a borrower dies, their federal student loans are discharged after the required proof of death is submitted. The borrower's family is not responsible for repaying the loans. A parent PLUS loan is discharged if the parent dies or if the student on whose behalf a parent obtained the loan dies.
Many parents struggling to repay student loan debt can qualify for loan forgiveness. A federal parent PLUS loan may be eligible for forgiveness through an income-contingent repayment plan or the Public Service Loan Forgiveness (PSLF) program. There are also options for parents that take out loans from private lenders.
Can a parent PLUS loan be transferred to a student? Parent PLUS loans are made directly to parents for their child's education. Under the current rules, parents cannot transfer these federal loans to a child, and they are solely responsible for paying back the loan.
If there is money left over, the school will pay it to your parent, usually by check. In some cases, with your parent's permission, the school may disburse the leftover money to you.
Your parent PLUS loan may be discharged if you (not the child) become totally and permanently disabled, die, or (in some cases) file for bankruptcy. Your parent PLUS loan also may be discharged if the student for whom you borrowed dies.
Technically, parent PLUS loan borrowers qualify for only the Standard, Graduated and Extended repayment plans, none of which take a borrower's income into account or promise loan forgiveness after a given period of time.
Parent PLUS student loan borrowers can potentially qualify for this forgiveness plan. However, under the standard 10-year repayment plan — which is the only repayment plan available to Parent PLUS borrowers — there will be no balance left to forgive after 120 payments.
Unlike all other federal student loans, there are no explicit borrowing limits for parent PLUS loans. Parents may borrow up to the full cost of attendance, which is determined by the institution, not the government, and includes books, travel and living expenses.
PLUS loans are federal loans that parents can take out to cover their child's college costs. The parent, not the student, is responsible for repaying the PLUS loan.
| Loan Balance | Repayment Term |
|---|---|
| Less than $7,500 | 10 years |
| $7,500 to $9,999 | 12 years |
| $10,000 to $19,999 | 15 years |
| $20,000 to $39,999 | 20 years |
Why would a parent take out a parent PLUS loan?
A parent PLUS loan can help cover any remaining financial gaps not covered by your child's financial aid package.
If you want to decrease the amount of your Federal Direct PLUS Loan, sign in to studentaid.gov and request the new (total) amount on your original application—do not submit the amount you wish to decrease the loan by. If you wish to cancel your Federal Direct PLUS Loan, please contact us.
Will my parent and I be able to cancel a PLUS loan after applying? Yes.
In addition, parent PLUS loans aren't eligible for some other types of federal student loan forgiveness programs. To get around this, some borrowers go through two or more federal consolidations to hide the origin of the loans, then request an IDR plan. This process is often called the double consolidation loophole.
Repayment of Parent PLUS Loans begins once the loan is fully disbursed to the school. You can request deferment on repayment, but interest will accrue during that time. Refinancing could lower your interest rate and change your repayment length.
Credit requirements for a Parent PLUS Loan
For five years before your credit is pulled: You can't have a loan default, a discharge of debts in bankruptcy, foreclosure, repossession, tax lien, wage garnishment, or a write-off of a federal student aid debt.
Parent PLUS loans have a fixed interest rate, and the borrower pays an origination fee for each loan. Parent PLUS loans are not subsidized, so interest begins to accrue on the outstanding loan balance as soon as funds are disbursed and continues to accrue even if the loan is in deferment.
No minimum credit score is needed to get a parent PLUS loan. Federal loans aren't like private parent student loans, which use your credit score to determine whether you qualify and what interest rate you'll receive. But parent PLUS loans do have a credit check, and you won't qualify if you have adverse credit history.
Parent PLUS Loans can have an impact on your credit score, but as long as you use the debt responsibly, you likely don't need to worry about anything negative in the long run. That said, there are other reasons to consider avoiding Parent PLUS Loans.
Payments are expected each month. The minimum monthly payment is $50, but this amount may be higher depending on your loan balance. You may prepay your loan at any time without penalty. Prepayment may substantially reduce the amount of interest you pay.
Are parent PLUS loans split in a divorce?
If the student's parents are divorced, both the custodial parent and the noncustodial parent are eligible to borrow from the PLUS loan program, provided that the combined amounts borrowed do not exceed the cost-of-attendance minus aid received cap.
With parent private student loans, you may be able to get a lower interest rate than you would with PLUS loans, but you can't take advantage of federal benefits like income-driven repayment plans (IDR) or Public Service Loan Forgiveness (PSLF).
Occasionally, excess funds are the result of a Parent PLUS Loan. If there are excess funds from a Parent PLUS Loan, it is refunded directly to the borrower.
- Income-Contingent Repayment (ICR)
- Public service loan forgiveness (PSLF)
- Career-based loan repayment assistance programs.
- Refinance parent PLUS loans in your child's name.
Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school. PLUS loans can help pay for education expenses not covered by other financial aid.
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