12 Oct Are Parent PLUS student loans eligible for forgiveness?

Q. I have a Parent PLUS loan. I recently retired, so is this loan eligible for loan forgiveness? And if I pass away, does it go away?
— Tired of debt

A. Student loans are an enormous burden on millions of Americans, and the loans that parents take for their children are part of that.

Getting rid of student loans isn’t easy.

Generally, parent plus loans can be forgiven or put on an income-based repayment plan if a parent is struggling to pay this type of debt, said Karra Kingston, a bankruptcy attorney in Union City.

First, to qualify for an income-based repayment plan on the Parent Plus loan, the borrower must have entered repayment on or after July 1, 2006, she said.

“To qualify under the income-based repayment plan, the monthly payment is based on 20% of the borrower’s discretionary income, which is defined as the amount by which the borrower’s adjusted gross income (AGI) exceeds 100% of the poverty line,” Kingston said. “If you can qualify for this, the loan will be forgiven after 25 years of qualified on-time monthly payments.”

You also may be able to qualify for student loan forgiveness under the Public Service Student Loan Forgiveness plan.

“Parent PLUS loans are eligible to be forgiven if they are a federal loan and worked full-time in a qualifying public service job,” Kingston said. “Generally, the borrower would have to be on an income-based repayment plan for 10 years and this loan would be forgiven.”

She said there are some circumstances under which a Parent PLUS loan would be considered eligible for a discharge. Some of these include:

• Death of the parent or death of the student borrower. Once you die, the loan could be eligible for a discharge.
• If you or the student become permanently disabled.
• Bankruptcy (although rare) could be a possibility to discharging the Parent PLUS loan.
• If the school has shut down or was fraudulent, there can be grounds to get the loan discharged.

Good luck to you with your debt.

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This story was originally published on Oct. 12, 2021.

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