The Cold, Hard Truth About Parent PLUS Loan Forgiveness in 2023

Trapped in relentless debt? Discover the realities of Parent PLUS loan forgiveness in 2023 and take control of your family's financial future.

As a parent, you'd move mountains to secure your child's academic dreams. Taking out Parent PLUS loans was a small price to pay. Or so it seemed. Now you're trapped, ensnared in relentless debt as your child ventures into adulthood. Is total freedom through loan forgiveness just a fantasy, or could it be reality?

This exhaustive guide lifts the veil on Parent PLUS loan forgiveness, revealing the limited avenues and harsh truths. Discover what options exist in 2023, so you can make empowered decisions for your family’s financial future.

Demystifying Parent PLUS Loans

Before evaluating forgiveness, it’s important to understand what Parent PLUS loans entail.

What are Parent PLUS Loans?

Parent PLUS loans allow biological or adoptive parents to borrow money from the federal government to cover educational expenses for their dependent undergraduate children. This includes tuition, room and board, books, and other related costs.

Unlike most federal student loans, Parent PLUS loans require a credit check and can be taken out regardless of financial need. As the borrower, you hold full responsibility for repayment—the debt obligation cannot be transferred to your child.

Parent PLUS loans carry a higher interest rate of nearly 7% and lack flexible repayment options. You can borrow up to the full cost of attendance, minus any other financial aid received.

Read in Detail here:

• Unlocking the Power of the Federal Direct Parent PLUS Loan for Education in 2023
• Grad PLUS Loans: A Comprehensive Guide to Federal Financing for Graduate School in 2023
• Parent Student Loans: A Complete Guide to Funding Your Child's Education in 2023
• Complete Guide to Non Government Student Loans or Private Student Loans in 2023
• Comparing the Best 7 Private Student Loans Lenders

Pros and Cons of Parent PLUS Loans

Parent PLUS loans provide funds when savings and scholarships fall short, but they also create a burdensome debt that impacts family dynamics.

Pros:

• Bridge the gap between savings/aid and total education costs
• Available regardless of income level
• Fixed interest rate

Cons:

• Responsibility lies solely with the parent
• Higher interest rate than federal student loans
• Requires credit check
• Limited flexible repayment options

For many parents, the crushing weight of Parent PLUS loans sparks an obsessive search for forgiveness. But what are the realities?

The Elusive Myth of Parent PLUS Loan Forgiveness

In desperation, you may pin hopes on student loan forgiveness to eliminate your Parent PLUS debt. But how feasible is this solution?

Does Parent PLUS Loan Forgiveness Exist?

The possibility of getting your Parent PLUS loans forgiven or discharged does exist. However, qualifying is exceptionally challenging, with low approval rates.

Several federal forgiveness programs technically allow Parent PLUS loans. But the rigid requirements and years-long commitments mean very few succeed in shedding their debt this way.

Was Parent PLUS Loan Forgiveness Possible Under Biden?

In August 2022, President Biden announced plans to cancel up to $10,000 in federal student loan debt for borrowers earning under $125,000. This initially provided hope for Parent PLUS loan holders.

However, the Supreme Court blocked Biden’s forgiveness program in June 2023. Hinging hopes solely on government intervention is risky. But other options remain.

Navigating the Labyrinth of Federal Forgiveness

Though available, federal forgiveness programs for Parent PLUS loans are deliberately complex. Expect a demanding journey with little payoff.

Income-Driven Repayment (IDR) Plans

IDR plans like Income-Contingent Repayment (ICR) limit payments to a percentage of your disposable income and discharge any remaining balance after 20-25 years.

But there’s a catch. Parent PLUS loans don’t automatically qualify for IDR. You must first consolidate them into a Direct Consolidation Loan. Even then, approval isn’t guaranteed. You must recertify income annually. Higher earnings could mean payments exceed standard repayment amounts.

Few see forgiveness under IDR. Any discharged sum is considered taxable income.

Public Service Loan Forgiveness (PSLF)

For PSLF, you must make 120 qualifying payments under an IDR plan while working full-time for an eligible employer like government or nonprofit organizations. The remaining balances are forgiven after 10 years.

But PSLF’s approval odds are dismal, with just a 2% success rate. Some believe they've met all requirements only to later get rejection letters.

Attempting federal forgiveness for Parent PLUS relief often leads borrowers down a demoralizing path. Other options exist.

Should You Pursue Federal Forgiveness Programs?

Forgiveness for Parent PLUS loans is possible but not probable. The rigid criteria and barely-there approval rates prevent most borrowers from realizing their dream of debt-free living.

Relying solely on these programs could prolong the pain. But by taking purposeful action, you can seize control of your finances.

Alternatives - Refinancing and Aggressive Repayment

While federal forgiveness lurks as a distant possibility, more immediate relief comes from tackling your debt head-on. Consider these proactive alternatives:

Refinancing Parent PLUS Loans

Refinancing involves taking out a new loan to pay off the existing debt at better terms, often a lower rate. This is done through private lenders.

Be aware you’ll lose federal protections like IDR plans and deferments. Do your research to ensure favorable rates and terms that align with your goals.

Accelerated Repayment Strategies

Repaying Parent PLUS loans swiftly limits interest costs. But it requires planning and discipline.

• Create a monthly budget to maximize income for extra payments
• Implement the debt snowball method to pay off debts from smallest to largest methodically
• Make lifestyle changes to boost earnings available for repayment
• Avoid taking on new debts before existing loans are defeated

While not as enticing as forgiveness, these actions put victory over debt within your grasp.

Finding Forgiveness for Special Circumstances

Though limited, forgiveness options for special cases do exist. Two worth noting are disability discharge and death discharge.

Disability Discharge

If a parent who took out a PLUS loan becomes totally and permanently disabled, the loan may qualify for a discharge. Specific criteria include:

• The disability must prevent you from working to earn income.
• It must be expected to last indefinitely or result in death.
• You must provide documentation from a physician.

This permanently cancels your repayment obligation. Just be aware discharged debt may count as taxable income.

Death Discharge

If the parent borrower of a PLUS loan dies, or the student beneficiary dies, the loan may qualify for discharge. Documentation proving the death will be required.

While morbid to consider, this avenue does offer relief to grieving families. They must still navigate the application process during a difficult time.

Overcoming Parent PLUS Loans - You Are the Solution

Freedom from oppressive Parent PLUS loan debt rests in your hands. Relying on forgiveness programs leads most borrowers down a disappointing path. But alternatives exist.

Arm yourself with financial wisdom. Approach repayment systematically, budgeting to accelerate progress. Refinance for better loan terms. Forgiveness may come someday, but for now, you hold the power.

Act with intention. Cut expenses. Increase earnings. Challenge yourself and your family to make sacrifices today, so your tomorrow is debt-free. With focus and perseverance, you can overcome.

FAQs :