Does a Parent PLUS Loan Qualify for Loan Forgiveness?

Featured Stories

Filter By Categories

If you borrowed money in the form of a Parent PLUS Loan to finance your child’s college education, then you may be wondering if the loan is eligible for forgiveness.  Good news: The answer is yes. Depending on your income and line of work, you have a couple of different options available to you.

Option #1: Income-Contingent Repayment Plan

Income-Contingent Repayment (ICR) Plans feature flexible repayment options, based on your income and family size, in addition to loan forgiveness after 25 years.  If you have consolidated multiple Parent PLUS Loans under the Direct Consolidation Loan Program, then you may be eligible to enroll in an ICR Plan.  Under ICR Plans, your monthly loan payment is limited to not more than 20 percent of your discretionary income, or the amount that you would be required pay on a fixed 12-year repayment schedule, whichever is less.  However, increases in your annual income can potentially result in higher monthly payments than would be required under a Standard Repayment Plan.  In addition, you are obligated to certify your income and family size on an annual basis, otherwise your required monthly loan payment will automatically revert to the amount due under the Standard Repayment Plan (although, formally speaking, you would still be enrolled in the ICR Plan). ICR Plans offer loan forgiveness for any balance remaining after 25 years; however, you will be required to pay income tax on the forgiven amount in the year that the balance is forgiven. You could be facing a hefty tax bill in the year that you receive forgiveness, so it is important to plan accordingly.

Option #2: Public Service Loan Forgiveness Program

If you work full-time for the federal government or a qualifying nonprofit organization, then you may qualify for student loan forgiveness under the Public Service Loan Forgiveness Program.  This program forgives outstanding loan balances for qualifying borrowers who make 120 qualifying monthly payments, which generally means that loan balances remaining after after 10 years are forgiven.  Borrowers must be enrolled in an income-based repayment program, such as the ICR Plan described above (Note: The ICR Plan is the only income-based repayment plan for which parent borrowers qualify.)  Borrowers enrolled in the Public Service Loan Forgiveness Program are not required to pay any income tax on forgiven amounts.

Utilize the Repayment Estimator Tool

If you are enrolled in one of these programs, you may be wondering how much of your debt will be forgiven.  The Federal Student Aid Office of the U.S. Department of Education provides this handy Repayment Estimator tool to compute loan payments and forgiveness under different repayment programs.  Borrowers can utilize this tool to explore all the repayment options available to them.

Edmit's advice helps you to be better off after graduation.

Merit and financial aid estimates based on your student profile

Earnings estimates and financial scores for your college and major

Recommendations to save thousands on college

I'm ready

Sign up for updates

Popular Tags

Financial Aid and Scholarships* Cost of College* paying for college financial aid FAFSA Student Loans* grants and scholarships Saving for College* federal student loans college tuition 529 plan cost of attendance expected family contribution Salary and Career* college financial planning financial aid award private student loans taxes college savings plan room and board on-campus housing merit scholarships budgeting for college college expenses federal financial aid merit-based financial aid private universities public universities edmit hidden gems college costs edmit team parent PLUS loan college applications living expenses CSS profile education expenses financial need income application fees financial aid appeal off-campus housing career choosing a college choosing a major college majors loan forgiveness affordable college degree programs loan repayment repayment plans student loan assistance student loan debt work-study application fee waivers college search coronavirus edmit scholarship institutional aid net price SAT college visits in-state tuition prepaid tuition plans private scholarships ACT budget free tuition international students internships need-based financial aid need-blind colleges qualified higher education expenses retirement savings southern colleges standardized testing tuition discount tuition guarantee tuition payment plans 401k UGMA UTMA applying to college college financial health college ranking systems college spending college transfers credit score discretionary income distance learning education savings accounts fees financial literacy full ride scholarship gap year grants health insurance options investment ivy league schools liberal arts degree meal plans midwestern colleges need-aware colleges out-of-state tuition saving school-based scholarships state aid tuition increases western colleges 568 presidents group Inversant MEFA asset protection allowance best price campus life college advisor college credits college deposit college viability community college concurrent enrollment cost by region cost by state crowdfunding dorms early decision educational expenses esports fee waivers financial wellness for-profit universities fraternities and sororities full tuition graduate school home equity loan income share agreements line of credit lists medical expenses medical school military benefits net price calculators new england colleges non-profit universities online learning online tuition out-of-state students percent need met private college consultant remote learning small business state schools student bank accounts student organizations subsidized loans title IV schools travel expenses tuition decreases tuition insurance tuition reciprocity undocumented students unsubsidized loans