Are you a parent who has taken out a Parent PLUS Loan to help your child pay for college? If so, you may be wondering if there are any ways to get that loan forgiven. The good news is that there are a few options available to you, depending on your circumstances.
In this article, we'll take a closer look at Parent PLUS Loan forgiveness, including the different programs available and the eligibility requirements. We'll also provide some tips for managing your Parent PLUS Loan if you're not eligible for forgiveness.
Before we dive into the details of Parent PLUS Loan forgiveness, let's first understand what a Parent PLUS Loan is and how it works.
Parent Plus Loan Forgiveness
Here are 9 important points about Parent PLUS Loan forgiveness:
- Qualifying employment
- 10 years of service
- Full-time employment
- Direct loans only
- Income-driven repayment
- $0 payments allowed
- Partial forgiveness possible
- Forgiveness amount varies
- Tax implications
To learn more about Parent PLUS Loan forgiveness, visit the Federal Student Aid website or talk to your loan servicer.
Qualifying Employment
To qualify for Parent PLUS Loan forgiveness through Public Service Loan Forgiveness (PSLF), you must be employed full-time in a qualifying public service job for at least 10 years while making 120 qualifying payments on your loan. Qualifying employment includes:
- Government service: This includes federal, state, local, or tribal government agencies.
- Military service: Active duty, National Guard, and Reserves all qualify.
- Nonprofit organizations: This includes 501(c)(3) organizations, as well as other nonprofit organizations that provide public services.
- AmeriCorps and Peace Corps: Service in these programs also qualifies.
It's important to note that not all public service jobs qualify for PSLF. For example, working for a government-owned corporation or a for-profit company that contracts with the government does not qualify. You can find a complete list of qualifying employers on the Federal Student Aid website.
If you're not sure if your employer qualifies, you can submit a PSLF Help Tool Request. The Help Tool will review your employment history and let you know if you're on track for forgiveness.
Once you've determined that you're employed in a qualifying job, you need to start making qualifying payments on your Parent PLUS Loan. To qualify, your payments must be made under an income-driven repayment plan. There are four income-driven repayment plans available: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR).
If you make 120 qualifying payments on your loan while working full-time in a qualifying public service job, the remaining balance of your loan will be forgiven.
10 Years of Service
To qualify for Parent PLUS Loan forgiveness through Public Service Loan Forgiveness (PSLF), you must be employed full-time in a qualifying public service job for at least 10 years. This means that you must work at least 30 hours per week for 10 full years.
- The 10 years of service do not need to be consecutive. You can take breaks in service, as long as you return to qualifying employment within a certain amount of time. For example, if you leave your public service job for a few months to have a baby, you can still qualify for PSLF as long as you return to work within a few months.
- You do not need to work for the same employer for the entire 10 years. You can change jobs as many times as you want, as long as you continue to work in a qualifying public service job.
- You can make qualifying payments on multiple loans at the same time. This means that you can make payments on your Parent PLUS Loan and other federal student loans at the same time and still qualify for PSLF.
- You can track your progress towards forgiveness using the PSLF Help Tool. The Help Tool will allow you to see how many qualifying payments you have made and how much longer you need to work before your loan is forgiven.
Once you have made 120 qualifying payments on your loan while working full-time in a qualifying public service job, the remaining balance of your loan will be forgiven. You will not have to pay any taxes on the amount of your loan that is forgiven.
Full-Time Employment
To qualify for Parent PLUS Loan forgiveness through Public Service Loan Forgiveness (PSLF), you must be employed full-time in a qualifying public service job. This means that you must work at least 30 hours per week for the entire time that you are making qualifying payments on your loan.
There are a few things to keep in mind about the full-time employment requirement:
- You can work multiple part-time jobs to meet the full-time requirement. For example, if you work two 20-hour-per-week jobs, you would be considered full-time for the purposes of PSLF.
- You can also work a combination of full-time and part-time jobs. For example, if you work a 30-hour-per-week job and a 10-hour-per-week job, you would also be considered full-time for the purposes of PSLF.
- You can take short breaks in your employment, as long as you return to work within a certain amount of time. For example, if you take a few months off to have a baby, you can still qualify for PSLF as long as you return to work within a few months.
- You do not need to work for the same employer for the entire 10 years. You can change jobs as many times as you want, as long as you continue to work in a qualifying public service job.
If you are not sure if your employment qualifies as full-time, you can submit a PSLF Help Tool Request. The Help Tool will review your employment history and let you know if you are on track for forgiveness.
Once you have made 120 qualifying payments on your loan while working full-time in a qualifying public service job, the remaining balance of your loan will be forgiven. You will not have to pay any taxes on the amount of your loan that is forgiven.
Direct Loans Only
To qualify for Parent PLUS Loan forgiveness through Public Service Loan Forgiveness (PSLF), you must have direct loans. Direct loans are loans that are made directly by the U.S. Department of Education. If you have a FFEL loan or a Perkins loan, you will need to consolidate your loans into a direct loan in order to qualify for PSLF.
Here are some of the benefits of consolidating your loans into a direct loan:
- You will be eligible for PSLF.
- You will have access to other federal loan forgiveness programs, such as Teacher Loan Forgiveness and Income-Driven Repayment Forgiveness.
- You will have one monthly payment instead of multiple payments.
- You can make your payments online or by automatic debit.
To consolidate your loans, you can visit the Federal Student Aid website or contact your loan servicer. The consolidation process usually takes 6-8 weeks.
Once you have consolidated your loans into a direct loan, you can start making qualifying payments towards PSLF. To qualify, you must make 120 qualifying payments on your loan while working full-time in a qualifying public service job.
Once you have made 120 qualifying payments, the remaining balance of your loan will be forgiven. You will not have to pay any taxes on the amount of your loan that is forgiven.
Income-Driven Repayment
To qualify for Parent PLUS Loan forgiveness through Public Service Loan Forgiveness (PSLF), you must make 120 qualifying payments on your loan. To qualify as a qualifying payment, you must make your payments under an income-driven repayment plan.
- Income-driven repayment plans are designed to make your monthly payments more manageable. Your payments will be based on your income and family size.
- There are four income-driven repayment plans available:
- Revised Pay As You Earn (REPAYE)
- Pay As You Earn (PAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- You can apply for an income-driven repayment plan by contacting your loan servicer.
- Once you are enrolled in an income-driven repayment plan, you can start making qualifying payments towards PSLF.
If you make 120 qualifying payments on your loan while working full-time in a qualifying public service job, the remaining balance of your loan will be forgiven. You will not have to pay any taxes on the amount of your loan that is forgiven.
$0 Payments Allowed
One of the benefits of income-driven repayment plans is that they allow for $0 payments. This means that if your income is low enough, you may not have to make any monthly payments on your loan.
- You can still qualify for PSLF even if you make $0 payments. As long as you are enrolled in an income-driven repayment plan and you are working full-time in a qualifying public service job, your payments will count towards PSLF.
- You can make $0 payments for up to 20 years under REPAYE and PAYE, and up to 25 years under IBR and ICR.
- After you have made the required number of qualifying payments, the remaining balance of your loan will be forgiven.
If you are struggling to make your monthly loan payments, you should consider applying for an income-driven repayment plan. You may be able to qualify for $0 payments, which can help you save money and qualify for PSLF.
Partial Forgiveness Possible
If you do not work in a qualifying public service job for the full 10 years required for PSLF, you may still be eligible for partial forgiveness of your Parent PLUS Loan.
- You can receive partial forgiveness if you make 120 qualifying payments while working in a qualifying public service job for at least 5 years.
- The amount of forgiveness you receive will be based on the number of qualifying payments you have made and the length of time you have worked in a qualifying public service job.
- For example, if you make 120 qualifying payments and work in a qualifying public service job for 7 years, you will receive 70% forgiveness of your loan.
- You can use the PSLF Help Tool to estimate how much forgiveness you may be eligible for.
Partial forgiveness of your Parent PLUS Loan can be a significant benefit, especially if you are not able to work in a qualifying public service job for the full 10 years required for PSLF. If you are considering working in a public service job, be sure to learn more about PSLF and partial forgiveness.
Forgiveness Amount Varies
The amount of Parent PLUS Loan forgiveness you receive will depend on the following factors:
- The number of qualifying payments you have made. You must make 120 qualifying payments to receive full forgiveness.
- The length of time you have worked in a qualifying public service job. You must work full-time in a qualifying public service job for at least 10 years.
- The amount of your loan that is eligible for forgiveness. Only the federal portion of your Parent PLUS Loan is eligible for forgiveness.
If you meet all of the eligibility requirements, you will receive full forgiveness of your Parent PLUS Loan. However, if you do not meet all of the requirements, you may still be eligible for partial forgiveness.
The amount of partial forgiveness you receive will be based on the following factors:
- The number of qualifying payments you have made.
- The length of time you have worked in a qualifying public service job.
- The amount of your loan that is eligible for forgiveness.
For example, if you make 120 qualifying payments and work in a qualifying public service job for 7 years, you will receive 70% forgiveness of your loan.
You can use the PSLF Help Tool to estimate how much forgiveness you may be eligible for.
Tax Implications
If you receive forgiveness of your Parent PLUS Loan through PSLF, you will not have to pay any taxes on the amount of your loan that is forgiven.
- This is because PSLF is considered a tax-free benefit.
- However, if you receive partial forgiveness of your loan, you may have to pay taxes on the amount of your loan that is forgiven.
- The amount of taxes you owe will depend on your income and other factors.
- You should consult with a tax advisor to determine if you will owe any taxes on the forgiveness of your Parent PLUS Loan.
It is important to note that the tax laws are subject to change. Therefore, it is important to stay up-to-date on the latest tax laws to ensure that you are aware of any changes that may affect your tax liability.
FAQ
Here are some frequently asked questions about Parent PLUS Loan forgiveness:
Question 1: Am I eligible for Parent PLUS Loan forgiveness?
Answer 1: To be eligible for Parent PLUS Loan forgiveness through Public Service Loan Forgiveness (PSLF), you must meet the following requirements:
- You must be employed full-time in a qualifying public service job.
- You must have direct loans.
- You must make 120 qualifying payments on your loan while working in a qualifying public service job.
Question 2: What is a qualifying public service job?
Answer 2: Qualifying public service jobs include employment in the following sectors:
- Government (federal, state, local, or tribal)
- Military
- Nonprofit organizations
- AmeriCorps and Peace Corps
Question 3: What are the income-driven repayment plans?
Answer 3: Income-driven repayment plans are designed to make your monthly loan payments more affordable. Your payments will be based on your income and family size. The four income-driven repayment plans available are:
- Revised Pay As You Earn (REPAYE)
- Pay As You Earn (PAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
Question 4: Can I make $0 payments on my loan?
Answer 4: Yes, you can make $0 payments on your loan if your income is low enough. You can still qualify for PSLF even if you make $0 payments, as long as you are enrolled in an income-driven repayment plan and you are working full-time in a qualifying public service job.
Question 5: What is partial forgiveness?
Answer 5: If you do not work in a qualifying public service job for the full 10 years required for PSLF, you may still be eligible for partial forgiveness of your Parent PLUS Loan. You can receive partial forgiveness if you make 120 qualifying payments while working in a qualifying public service job for at least 5 years.
Question 6: Are there any tax implications for loan forgiveness?
Answer 6: If you receive forgiveness of your Parent PLUS Loan through PSLF, you will not have to pay any taxes on the amount of your loan that is forgiven. However, if you receive partial forgiveness of your loan, you may have to pay taxes on the amount of your loan that is forgiven.
Closing Paragraph: If you have any further questions about Parent PLUS Loan forgiveness, you can contact your loan servicer or visit the Federal Student Aid website.
Now that you know more about Parent PLUS Loan forgiveness, here are some tips to help you manage your loan:
Tips
Here are some tips to help you manage your Parent PLUS Loan:
Tip 1: Choose the right repayment plan.
There are four income-driven repayment plans available that can make your monthly payments more affordable. Talk to your loan servicer to see which plan is right for you.
Tip 2: Make extra payments when you can.
If you have the extra money, make extra payments on your loan. This will help you pay down your loan faster and save money on interest.
Tip 3: Consider refinancing your loan.
If you have good credit, you may be able to refinance your loan at a lower interest rate. This can save you money on your monthly payments and help you pay down your loan faster.
Tip 4: Apply for Parent PLUS Loan forgiveness.
If you work in a qualifying public service job, you may be eligible for Parent PLUS Loan forgiveness. This can help you save money and pay down your loan faster.
Closing Paragraph: By following these tips, you can manage your Parent PLUS Loan and reach your financial goals.
Now that you know more about Parent PLUS Loan forgiveness and how to manage your loan, you can take steps to pay it off and achieve your financial goals.
Conclusion
Parent PLUS Loans can be a helpful way to pay for your child's education. However, it is important to understand the terms of your loan and to make a plan for repayment. If you work in a qualifying public service job, you may be eligible for Parent PLUS Loan forgiveness. By following the tips in this article, you can manage your Parent PLUS Loan and reach your financial goals.
Closing Message: Remember, you are not alone. There are many resources available to help you manage your Parent PLUS Loan. Talk to your loan servicer, visit the Federal Student Aid website, or contact a financial advisor.