Do You Have Parent Plus Loans or Know Someone Who Does?
The “pandemic repayment pause” on student loans has come to an end. Borrowers must now prepare to resume making payment in October. In addition, interest will begin to accrue again beginning September 2023.
Remember to update your contact information with your loan servicer or apply for any available forbearance that you may be eligible for. Your first bill should come at least 21 days before it is due.
Currently over 3.7 million parents are holding Parent PLUS loans, which accounts for approximately $108.5 billion of the student education debt. Since the student’s borrowing is capped at $7,500 per year, like me, most parents fill in the gap by taking out PLUS loans in order to pay for their children’s education.
Unfortunately, Parent PLUS loans are not eligible for the Income Driven Repayment (IDR) Plan, which the student borrowers are provided with, to lower their monthly payments. There are a few extenuating circumstances where a parent PLUS loan may be forgiven or discharged such as death (child or parent), disability or bankruptcy. (Read more here: Student Loan Forgiveness | Federal Student Aid)
Parents can however consolidate their loans and try to apply for the Income-Contingency Repayment (ICR) Plan. Under this plan, payments are capped at 20% of the borrower’s monthly discretionary income for 25 years. This plan is only available for the William D. Ford Direct Loan Program (Direct Loans)
There are three other types of payment plans and according to Forbes, the ICR generally has the highest monthly of all the other plans. What you want to do is research and analyze each option to see which of these plans will align best with your budget.
There is an opportunity for holders of PLUS loans to apply for forgiveness if they work in a government or nonprofit organization. Those eligible can apply for the Public Service Loan Forgiveness (PSLF) See the list below for those eligible:
- Teachers
- Government Employee
- Nurse, Doctor or Other Medical Professional
- If you have a disability
- If you work for a Nonprofit
The President, through the US Department of Education, fought hard to forgive $10K-20K of student loans per borrower; however, that decision was challenged in court and the Supreme Court ruled against the President’s plan.
Pursuing higher education is quite costly but earning a degree can open many doors to a promising career. I am among the millions of Americans that have paid the high price, racking up huge student loan debts to earn my degrees. I am now also holding PLUS loans for my children.
Let’s continue to stand with those who are challenging legislation, in hopes of making higher education more affordable.
This week, the Saving on a Valuable Education (SAVE) Plan, which is one of the Income Driven Repayment (IDR) Plan, is being rolled out.
Visit the Federal Student Aid website to learn more and to submit your application https://studentaid.gov
Please consider sharing this information with someone you know and leave a comment if you have found value in this content.
If you have additional questions, please contact me by clicking on the link below.
SLS Accounting & Business Consulting provides top-notch individualized services in the areas of:
- Business Coaching & Consulting
- Small Business Bookkeeping
- Accounting
- Tax Preparation
- Tax Resolution