As student loans increasingly aren’t enough to cover the cost of a college education, parents are picking up the rest of the tab with loans of their own — and sometimes finding that they can’t pay federal parent PLUS loans back.
If you feel overwhelmed and worry that you can’t pay your parent PLUS loan, know that there are options available. From signing up for an Income-Contingent Repayment (ICR) plan to pursuing forgiveness or opting for a parent PLUS deferment or forbearance, among other strategies, you can make your payments more manageable.
1. Enroll in income-driven repayment
2. Sign up for an alternative repayment plan
3. Find out if you’re eligible for parent PLUS loan forgiveness
4. Refinance the federal parent PLUS loan (in your child’s name)
5. Ask your child to help out
6. Consider parent PLUS loan deferment or forbearance
If you’re struggling with federal student loan payments, you can sign up for an income-driven repayment (IDR) plan. Under these plans, the government extends your repayment term and caps your monthly payments to a percentage of your discretionary income.
There are four types of IDR plans for federal student loans, but if you have parent PLUS loans, you have only one option: Income-Contingent Repayment (ICR).
Under this plan, your lender sets your payments at 20% of your income. Your repayment term can be as long as 25 years. Although you’ll pay more in interest over time, this repayment plan can make your monthly payments more manageable.
If you still have a balance on your loans after making payments under an ICR plan for 25 years, the government will discharge the remaining amount. However, the forgiven amount could be taxable as income (depending on when relief arrives), so it’s important to plan ahead so you’re not surprised by a large tax bill. (Taxes on forgiven student loans were waived through 2025, via pandemic-era legislation.)
To get on an ICR plan, the government requires you to first consolidate your federal parent PLUS loan into a Direct Consolidation Loan and then repay the loan under the ICR plan. To apply for a consolidation loan online, visit StudentAid.gov.
If you first want to see if an Income-Contingent Repayment could benefit you, use our calculator.
Income-Contingent Repayment Calculator
A federal parent PLUS loan is eligible for other repayment plans outside of ICR. If you need some more breathing room in your budget, consider these alternatives:
- Graduated Repayment Plan: Your payments start out lower and then increase every two years. The repayment term lasts for up to 10 years. This could be a helpful option if you have a low income now but expect it to increase in the future.
- Extended Repayment Plan: Your payment term is extended to up to 25 years, reducing your monthly payments. To qualify, you must have at least $30,000 in outstanding parent PLUS loans.
Keep in mind that you will pay more in interest over time with these alternative repayment options, though they can reduce your monthly bill so you have more breathing room.
While many people think that parent PLUS loan forgiveness isn’t an option, that’s untrue. A parent might qualify for Public Service Loan Forgiveness (PSLF) if they work for an eligible nonprofit organization or government agency for 10 years.
After 10 years of making qualifying payments, the government will forgive the parent’s remaining loan balance. Unlike other forms of forgiveness, any amount that is forgiven under PSLF has not historically been considered taxable income.
In October 2022, the Department of Education announced it would offer a one-year waiver with new rules making it easier to qualify for PSLF. Unfortunately, though, parent PLUS loan borrowers were excluded and would still need to consolidate and switch to an ICR plan to become eligible.
If you have parent PLUS loans but don’t see PSLF as an option, take solace in the fact that there are other relief options out there. You might qualify for aid based on your career, location or other unique criteria. Search for such opportunities here:
- Student loan forgiveness programs
- Student loan repayment assistance programs
If you’ve reached a point where you can’t pay your parent PLUS loan or are approaching retirement, you might want to consider refinancing the loans into your student’s name.
If your child is gainfully employed and has a good credit score, they can work with a private lender to refinance the debt, taking out a new loan to pay off the parent PLUS loan. They might even get a lower interest rate, a longer repayment term or a reduced monthly payment by refinancing.
This approach makes your child solely responsible for repaying the debt. You’ll no longer make payments on the loans, so you can focus on your other financial goals.
In some cases, you may find that refinancing your parent PLUS loan is worthwhile even if your name needs to stay on the loan. There are some banks that offer refinancing for parent PLUS loan borrowers, and parents may get a better interest rate through refinancing, which could allow you to save a significant amount of money over the life of the loan.
In the government’s eyes, you are responsible for repaying parent PLUS loans. The government can’t force your child to make payments on your behalf. But if you’re having trouble keeping up with your payments, it might be worth talking with your child.
Even if you don’t formally refinance the loans in your child’s name, you can sit down and explain your financial concerns. Work together to come up with a way for your child to help with the payments, such as covering 50% of the monthly bill. That way, you can get some relief while still helping your child in the early stages of their career.
In certain situations, you can enter your loans into deferment or forbearance. That means you can temporarily stop making payments without becoming delinquent on your debt, though interest will continue to accrue onto your balance.
Parent PLUS loan deferment or forbearance may be an option in the following situations:
- If you or the student for whom you took out a parent PLUS loan is enrolled at least half-time at an eligible school
- If you’re unemployed or facing significant financial hardship
- If you’re serving on active duty in the U.S. armed forces
- If you’re serving in the Peace Corps
- If you’re in a full-time rehabilitation training program for people with disabilities
The amount of deferment or forbearance you receive for your payments depends on your situation. Interest generally will continue to accrue on the loans. Still, deferment or forbearance can give you time to get back on your feet.
FAQs: When you can’t pay your parent PLUS loan
For quick reference, here are some key facts about parent PLUS loans, including when they come due.
When are you supposed to start repaying your parent PLUS loan?
Borrowers of parent PLUS loans are expected to begin making payments after the loan is funded. However, you can request a parent PLUS loan deferment to delay the start of repayment. To qualify for a deferment, your child must be enrolled at least half-time or have left school within the past six months.
Is there a grace period for parent PLUS loans?
There is no grace period for parent PLUS loans, but you can request a deferment that will span six months after your student graduates, leaves school or drops below half-time enrollment.
Can you defer parent PLUS loan repayment if your student goes to graduate school?
Yes, borrowers regain eligibility for a parent PLUS loan deferment if their child goes back to school, even for a second degree. As long as your student is enrolled at least half-time, you can press pause on your loan payments. In cases where your child is returning to school or seeking another degree, contact your federal loan servicer to complete an application for a parent PLUS loan deferment.
Do parent PLUS loans qualify for the federal loan repayment pause during COVID-19?
Yes, during the federal student loan interest freeze, parent PLUS loans were eligible. That means that you could take a penalty-free break on your monthly dues — and see no interest accrue and capitalize onto your balance — from the beginning of the freeze (in late March 2020) to its expiration date (Jan. 31, 2022). To confirm your eligibility for this repayment relief, consult your federal loan servicer.
What happens if you don’t repay your parent PLUS loan?
If you can’t pay your parent PLUS loan and ignore your balance (instead of setting a strategy), you could suffer serious consequences. Your credit report and score will suffer; your tax refunds and other federal payments could be seized; and your wages could be garnished. Before any of these and other penalties come into play, contact your federal loan servicer to explore options, such as parent PLUS loan deferment and forbearance.