If you have a child who is in college or has already graduated, then you’re all too familiar with the debt load they’ve accrued. Many parents may find themselves in debt, too, thanks to the Parent PLUS loan program. Parent PLUS is a federal program that allows parents to get student loans in their name so that their children can go to college. If you want to know more about how student loans work, check out this debt guide, which talks about the ins and outs of different types of debt.
If you took on debt to send your kid(s) to college, you may be feeling the crunch of having to pay for student loans while still paying your other bills and wondering if there is some sort of relief available. We’ve found the five most popular methods parents use to seek student loan forgiveness below.
Options available for parents who helped their kids get student loans
If you’re looking for a way to have your Parent PLUS loan reduced, there are several avenues available such as refinancing. Some paths may be easier to go down than others, but it’s crucial to be aware that some require specific reasons before approval. Consider taking a look at a Parent Plus loan calculator to see how much you can save by refinancing your loan.
Income-Contingent Repayment (ICR)
The federal government offers a variety of repayment options for student loans taken out by either the child or parents. Parent PLUS loans, however, are only eligible for one method: Income-Contingent Repayment, also known as “ICR.” ICR will cap your payments at a maximum of 20% of your total discretionary income for the next 25 years. Once your 25 years are up, the remaining balance is forgiven.
Public service loan forgiveness
If you’re working for an eligible non-profit or government employer, then you may be able to have your PLUS loans forgiven. You’ll need to have made 120 months of on-time payments and be working in a small selection of job roles to qualify, but even then, there aren’t any guarantees you’ll be approved. Less than 2% of applications qualify for this kind of forgiveness.
Closed school discharge rules
If your child attended a school that has closed due to deceptive practices or violations of state laws, you might qualify to have your PLUS loans forgiven. Look into the “borrower defense to repayment” program to see what loans could be eligible.
Parents deemed to have total and permanent mental or physical disabilities by the Social Security Administration and your doctor can qualify for having the student loans taken out for their child discharged. This isn’t an easy thing to accomplish and can affect your ability to earn money going forward, so take some time to consider if this is the best route for your financial situation.
If all else fails, you can consider refinancing student loans with a private lender.. The good news is that you may be able to transfer all the loans into your child’s name instead of yours. There are a few hurdles to jump through, but the biggest is that your kid will need to have a strong credit history of their own, or you won’t be approved.
The bottom line
It may feel like times are bleak when trying to get out from under student loan debt, but not all hope is lost. Look into the options above and do your research to see how you can qualify. The sooner you act, the higher the likelihood you’ll be able to find the best path for your situation.