The terms and conditions of qualifying for student loan forgiveness can be confusing. Just take these stats: As of summer 2018, only 289 of nearly 29,000 people who applied for Public Service Loan Forgiveness were approved. That’s a 99 percent rejection rate.
Clearly, it’s not an easy approval process. Which gets to this email question from Shelby, a Two Cents reader:
My dad took out a significant amount of money for both my brother and I back in 2008-2010 and due to the recession, I don’t think he’s made much, if any, progress paying them back. Despite friends/financial advisors back at my school reassuring me they were his loans, I’m still terrified the debt will fall on me one day. Wondering if there is any chance this debt will be mine one day and if you’ve heard of any Parent PLUS forgiveness or support options I could get on my dad’s radar that aren’t a scam.
This advice is tailored to Shelby’s situation, but it may also be applicable to you if you’re interested in pursuing the forgiveness track for your federal student loans.
Parent PLUS loans are federal student loans taken out by a parent or guardian to help cover the tuition costs for undergraduate, dependent children, and are therefore the responsibility of the parent to repay, not the child. It is possible for Parent PLUS loans, like other federal loans, to be forgiven. Whether or not your dad qualifies, however, is a different question.
“It is possible to get Parent PLUS loan forgiveness through programs including income-contingent repayment and Public Service Loan Forgiveness,” Teddy Nykiel, student loans expert for NerdWallet, writes in an email. “But like all legitimate student loan forgiveness programs, relief isn’t immediate.”
Your dad will need to make on-time payments for at least ten years, and he’ll need to follow the program requirements to the letter. As the stats highlighted above show, even the most disciplined borrowers haven’t been able to qualify. Not that that means your dad never could, but that it’s not a simple process. You can read more about the forgiveness options here.
Depending on your dad’s circumstances, it might make more sense for him to consider refinancing or switching payment plans to something more manageable. “The income-contingent repayment plan caps payments at 20 percent of the borrower’s discretionary income or the amount they’d pay on a 12-year fixed repayment plan, whichever is less,” writes Nykiel.
Your dad will need to repay the loans, not you. “There’s no chance that a parent PLUS loan could become the student’s responsibility, unless the student refinances the loan in their own name through a private lender,” he says. “The PLUS loan can be discharged if the parent becomes permanently disabled, or if the parent or student dies.” You can read more about that here. Refinancing with a private lender also takes away the chance for forgiveness all together.
So to recap, it is possible for the Parent PLUS loans to be forgiven, but it’s not an easy process. Your dad should call his servicer and see if they can help him get on the track that works best for him.