How can I Pay Back My Parent PLUS Loan?

Featured Stories

Filter By Categories

If you borrowed money in the form of a Parent PLUS Loan to finance your child’s college education, you may be wondering what your options are for repaying the debt.  The good news is that you have several different alternatives available to you.


Take Advantage of the Deferment Period

First of all, you may be wondering when you need to start repaying your Parent PLUS Loan.  By default, the U.S. Department of Education requires repayment on a Parent PLUS Loan to begin as soon as the loan is fully disbursed.  However, you may request repayment deferment while your child is still in school and for the customary six-month grace period following graduation.  Keep in mind that interest accrues during the entirety of the deferment period, and is capitalized (added to the principal amount that you actually borrowed) when repayment begins.  As a result, when you do start to repay the debt, you will be paying interest on interest, in addition to interest on the original loan amount that you received.

  • Pro tip: For schools that require you to apply for Parent PLUS Loans via StudentLoans.gov, you have the option to request repayment deferment during the initial loan application process.  


When it is time to start repaying your Parent PLUS Loans, you have several different options available to you, each described below.


Option #1: Standard Repayment Plan

You are automatically enrolled in the Standard Repayment Plan, which has a 10-year repayment term.  If you can afford the monthly payments, this is a viable option for paying off the debt in a relatively short span of time with minimal interest expense.  


Option #2: Graduated Repayment Plan

Another option is the Graduated Repayment Plan, which also has a 10-year repayment term.  Monthly payments are lower at first and increase every two years, with monthly payment amounts never less than the amount of interest that accrues between payments and never greater than three times the initial monthly payment amount.  While the Graduated Repayment Plan is a viable option for borrowers who expect to steadily earn more income over time, it accrues more interest overall than the Standard Repayment Plan.


Option #3: Extended Repayment Plan

The Extended Repayment Plan is available to borrowers with outstanding loan balances of more than $30,000.  Monthly payments may be a fixed or graduated amount, and the loan term can be up to 25 years.  Extended Repayment Plans offer lower monthly payments than the Standard or Graduated Repayment Plans; however, the extended repayment period results in higher interest costs paid over time.


Option #4: Direct Consolidation Loan Program

If you are repaying more than one Parent PLUS Loan, then you may want to consider consolidating your loans.  The Direct Consolidation Loan Program enables you to simplify the repayment process by combining multiple student loan debt installments into a single monthly payment.  Consolidated loans have a fixed interest rate with flexible payment options. You can likely lower your monthly payment; however, this will almost always extend the overall length of the repayment term and result in higher total interest costs.  In addition, when you consolidate your loans, by default you forfeit your right to any remaining deferment period, which normally extends until six months after the child’s graduation.

  • Pro tip: You have the option to indicate on the Direct Consolidation Loan application that you want the loan servicer to delay consolidation of your loans until near the end of the deferment period.


Option #5: Income-Contingent Repayment Plan

If you have consolidated your Parent PLUS loans under the Direct Consolidation Loan Program, then you may be eligible to enroll in an Income-Contingent Repayment (ICR) Plan.  Under ICR Plans, your monthly loan payment is based on your annual income and family size.  Monthly payments are 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.  Increases in your annual income can potentially result in higher monthly payments than would be required under a Standard Repayment Plan (though, in such a scenario, your net interest expense would be reduced).  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. ICR Plans offer loan forgiveness for any loan 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.


Option #6: Refinancing with a Private Lender

You have the option of refinancing your PLUS Loan with a private lender.  The PLUS Loan can be refinanced in your name or your child’s name.  The refinanced loan will likely have a lower interest rate, resulting in lower monthly payments.  However, extension of the repayment term will result in a greater total interest expense paid over time.  In addition, private loans do not feature any of the protections or flexible repayment options offered by the U.S. Department of Education for federal loans, such loan forgiveness, income-based repayment options, and financial hardship provisions such as deferment and forbearance.


Option #7: Public Service Loan Forgiveness Program

Parents who work full-time for the federal government or a qualifying nonprofit organization 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.)  In addition, this loan forgiveness program does not require borrowers to pay any income tax on the forgiven amount.


Utilize the Repayment Estimator Tool

Need more specific information?  The Federal Student Aid Office of the U.S. Department of Education provides a handy Repayment Estimator tool to compute your monthly payments 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