New Biden Plan Offers Loan Forgiveness, Excludes Parent PLUS Loans; Consolidation Key to Unlocking Options

The new SAVE plan from the Biden administration offers loan forgiveness after 10-25 years, but not for parents using Parent PLUS loans; however, consolidation opens forgiveness options, either through income-contingent repayment or public service programs, with a “double consolidation loophole” mentioned, set to close after July 1, 2025.

Parents with federal Parent PLUS loans for their children’s education, although eligible for forgiveness, must consolidate the loans and choose between specific repayment paths. (PHOTO: iSTOCK)

READ ALSO: INTERNATIONAL CONCERNS ESCALATE AS SAFETY OF DEMOCRATICALLY ELECTED PRESIDENT OF NIGER HANGS IN THE BALANCE AMIDST POLITICAL CRISIS

Can Parent PLUS Loans Be Forgiven? Options and Qualification for Parent PLUS Loans Forgiveness

The Biden administration has introduced a new plan called SAVE that helps some people with student loans. This plan allows borrowers to get their loans forgiven after they make payments for 10 to 25 years. However, according to First Coast News, parents who used federal Parent PLUS loans to help pay for their kids’ education can’t use SAVE to pay off those loans.

A common question is whether Parent PLUS loans can be forgiven. The answer to the question is yes, but there are specific steps. The report stated that if these ‘Parent PLUS loans’ are combined into one through a process called consolidation, they can qualify for forgiveness. Borrowers of ‘Parent PLUS loans’ then need to choose between two options: an income-contingent repayment plan or the public service loan forgiveness program.

READ ALSO: ARREST MADE IN CONNECTION WITH ROBERT BOWERS TRIAL: WHITE SUPREMACIST ‘REVEREND’ DETAINED FOR ALLEGED JURY INTIMIDATION AND THREATS

Parent PLUS Loans: Income-Contingent Repayment Plan, Public Service Program and More

According to Verify, the income-contingent repayment plan adjusts monthly payments based on income and family size, potentially leading to forgiveness after 25 years of payments. The public service program offers forgiveness after 10 years of full-time work for qualifying public service jobs. However, an important key to remember regarding ‘Parent PLUS loans’ is that only payments made after consolidation count.

There’s also a ‘Parent PLUS loans’ strategy known as the “double consolidation loophole,” which some advisory services suggest. This involves consolidating loans twice to access other repayment plans like SAVE. However, this loophole will be closed for borrowers who consolidate after July 1, 2025. In short, while the SAVE plan offers relief for certain borrowers, parents with Parent PLUS loans need to consolidate and choose the right repayment path for loan forgiveness.

READ ALSO: 78.5 CENTS SOMERSET COUNTY TAX ASSESSMENT: SCHOOL DISTRICT IMPLEMENTS LOWERED TAX RATE PER $100 OF REAL PROPERTY VALUE