Are Parent PLUS Loans Forgiven After 10 Years?

Yes, Parent PLUS loans can be forgiven after 10 years, but only under very specific conditions, primarily through the Public Service Loan Forgiveness (PSLF) program. This is not an automatic process and requires the borrower to meet stringent eligibility criteria.

Public Service Loan Forgiveness (PSLF) for Parent PLUS Loans

The Public Service Loan Forgiveness (PSLF) program is designed to forgive the remaining balance on federal direct loans for borrowers who work full-time for a qualifying employer and make 120 qualifying monthly payments. For Parent PLUS loans to qualify for PSLF, they must go through a specific process.

Key Steps for Parent PLUS Loans to Qualify for PSLF

For a Parent PLUS loan to be eligible for PSLF, the parent borrower must follow these crucial steps:

1. Consolidate the Loan: The Parent PLUS loan must first be consolidated into a Direct Consolidation Loan. This is a mandatory step, as original Parent PLUS loans are not directly eligible for most income-driven repayment (IDR) plans, which are required for PSLF.
2. Enroll in Income-Contingent Repayment (ICR) Plan: After consolidation, the Direct Consolidation Loan (which now includes the Parent PLUS loan) must be placed on the Income-Contingent Repayment (ICR) Plan. The ICR plan is the only income-driven repayment plan available for consolidated Parent PLUS loans that can lead to PSLF.
3. Make 120 Qualifying Payments: The borrower must then make 120 qualifying monthly payments. These payments must be:
   • Made after October 1, 2007.
   • For the full amount due as shown on the bill.
   • Made no later than 15 days after the due date.
   • Made while employed full-time by a qualifying employer.
   • Made under a qualifying repayment plan (in this case, the ICR plan).
4. Maintain Qualifying Employment: Throughout the 10 years (120 payments), the parent borrower must be employed full-time by a qualifying non-profit organization or a government agency at any level (federal, state, local, or tribal).

Important Considerations for PSLF

• Borrower-Specific: It is the parent borrower's employment and payment history that matters for PSLF, not the student's. The parent must meet the employment criteria.
• Application Process: Borrowers must regularly submit the PSLF Employment Certification Form to track their progress and ensure their employment and payments are counted. After making 120 qualifying payments, a final PSLF application must be submitted for forgiveness.
• Tax-Free Forgiveness: Unlike some other forgiveness programs, the amount forgiven under PSLF is not considered taxable income by the IRS.

PSLF Path for Parent PLUS Loans

The table below summarizes the required path for Parent PLUS loans to qualify for 10-year forgiveness through PSLF.

Parent PLUS loan forgiveness after 10 years is exclusively tied to the PSLF program and its strict requirements concerning loan type, repayment plan, and qualifying employment.