Parent Plus Loan Forgiveness Retirement
There is no forgiveness available to Parent PLUS Loan borrowers looking to retire. Remember that Parent PLUS Loan forgiveness is only possible through the Income-Contingent Repayment Plan or PSLF after first consolidating your Parent PLUS Loan into a federal Direct Consolidation Loan.
Although forgiveness might not be a possibility for parents looking to retire, below are some ways for parents with a Parent PLUS Loan to prepare for retirement.
Can I Get Private Loans Discharged Due To Disability
If you borrowed student loans from a bank, credit union, or another private lender, your access to loan forgiveness, even in cases of disability, is likely more limited. However, some private lenders do forgive the remaining loan balance in the case of a disability or death. If your lender offers this option, be prepared to provide documentation of your disability. Each lender will have a unique application process and qualifying criteria.
What Is Total And Permanent Disability Discharge
Total and Permanent Disability discharge is a program created by the U.S. Department of Education. It relieves the disabled borrower from having to repay federal student loans or TEACH Grant service obligations.
Nelnet, a student loan servicer, assists the Department of Education with this process. Nelnet manages all of the communications with borrowers on behalf of the Department.
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The Extended Student Loan Repayment Plan
The Extended Student Loan Repayment Plan lets you extend the amount of time you have to pay off your loan, from the 10 year Standard plan, to a term of 12, 15, 20, 25 or even 30 years.
The amount of time youre able to extend is based on the amount of money that you owe, with bigger total debts being allowed to get repaid over longer periods of times
This obviously reduces your monthly payments, but again, while it means youll owe less each month in the short-term, it also means youll owe more over the course of your loan, since it gives more time for interest charges to accumulate.
Before agreeing to alter your repayment plan, the first thing you should do is play around with a Student Loan Repayment Calculator to determine which plan is truly going to work best for you, not just in the near-term, but over the lifespan of your loan.
Student Loan Repayment Assistance Programs
If you dont find any federal options that can help you with your parent PLUS loans, look elsewhere. Many state agencies offer repayment programs for student loans. You usually have to work in certain careers, like a teacher, nurse, doctor or lawyer. Additional requirements often apply, such as working in a rural or high-need area for a specific number of years. While this isnt the same as forgiveness, you can earn free money to pay off your student loans faster.
Student loan repayment is becoming more popular among the private sector as well. Companies are increasingly offering loan repayment as a benefit for employees. If youre in the market for a new job, research employers that offer loan repayment as a perk.
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Student Loan Disability Discharge Plus Alternatives
Dealing with federal and private student loans on top of a long-term disability can be a stressful situation, but there are some options to lessen the burden.
Student loan forgiveness for disability via TPD is a great solution, but before you apply, make sure you meet the requirements. If you dont, consider other loan-management strategies to ease your repayment, including:
| Pro | ||
|---|---|---|
| You can suspend your loan payments. | Interest will accrue on your balance . | |
| Income-driven repayment | It will cap your monthly payment at a percentage of your income. | It will also increase your interest costs. |
| Consolidation and refinancing | You can group your old loans into one new loan, and if you choose student loan refinancing, you may be able to lower your interest rate. | If you refinance federal loans , youll lose protections like access to income-driven repayment. |
Know that even if you dont qualify for TPD student loan disability discharge or similar private lender support, you could still find student loan forgiveness programs that will slash or eliminate your debt balance.
And there are other ways of getting debt-free, even beyond forgiveness check out our guide to student loan repayment for a look at some of your options.
Andrew Pentis contributed to this report.
How Do I Know If My Loans Have Been Forgiven
If the Department of Education determines that you qualify for a TPD discharge, you’ll receive a notification that your loans have been forgiven or your TEACH Grant service obligation does not need to be completed. You’ll also receive a refund of any loan payments you made on or after the effective date of your disability certification.
If you qualify due to SSA documentation or a physician’s certification, note that you will be subject to a three-year monitoring period. If you don’t meet certain conditions at any time during this period, your loan or grant service obligation will be reinstated.
Reinstatement may occur if any of the following happens during the three-year period:
- Your annual earnings from employment exceed the poverty guideline amount for a family of two in your state.
- You receive a new federal student loan under the direct loan program or a new TEACH Grant.
- You get another disbursement from a direct loan or TEACH Grant that was first disbursed before your discharge, and you don’t return it within 120 days.
- The SSA notifies the Department of Education that you’re no longer disabled or that your next scheduled disability review will no longer be five to seven years from your last determination.
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Other Financial Relief Options For Parent Plus Loans
While the processes outlined above are technically the only ways to earn forgiveness or a discharge for a Parent PLUS Loan, there are still several other ways to help reduce the financial burden of Parent PLUS debt.
These programs wont let you eliminate the outstanding balance of your loan, but they will help save you money by doing things like decreasing your monthly payments, pausing monthly payments, and basically making your debt more affordable, at least in the short-term.
The most popular ways to reduce your monthly payments and near-term debt burden for Parent PLUS Loans are:
- Student Loan Refinancing
- Changing Your Student Loan Repayment Plan
I Think I Qualify How Do I Start The Process
- The easiest way is to apply online. The application will guide you through the process.
- You can also complete a paper application. To get the latest application, call Nelnet at 888-303-7818 or email .
Tip: You can authorize a representative to help you with the application. This can be someone you trust, an advocate or attorney.
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Your Discharge Could Be Delayed Or Revoked
Like the borrower defense to repayment program, the federal governments student loan disability charge initiative hasnt operated without hiccups.
An NPR investigation published in December 2019 revealed that hundreds of thousands of borrowers hadnt yet received the disability discharge for which they were eligible. To be fair, included in that surprising number are borrowers who had yet to apply.
Heres another catch: Once youre approved for a student loan discharge via TPD and even after you receive it it could be voided if you fail to meet certain standards during your three-year monitoring period .
Your loan balance could reset, for example, if you earn an income above the federal poverty guideline or dont recertify your earnings annually with Nelnet. The same thing would occur if you return to school and borrow a new federal student loan.
In addition, borrowers who no longer have a permanent disability within the three-year window could lose their discharge.
If your disability discharge was previously revoked
Contact your federal loan servicer. Its possible your discharge could be returned to you, especially if it was revoked because you failed to provide income documentation during the coronavirus pandemic. The education department announced on March 29, 2021, that no borrowers would have their loans reinstated because of this circumstance.
If youre a new applicant to TPD
What Is Total And Permanent Disability Loan Forgiveness
The total and permanent disability discharge program provides complete forgiveness for eligible student loan borrowers with direct loans, Federal Family Education Loans and federal Perkins loans.
Additionally, if you received a TEACH Grant, you may qualify to be exempt from the program’s service obligation. There are three ways you can qualify for TPD forgiveness.
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Parent Plus Loan Forgiveness Student Through Income
Parent PLUS loans are not directly eligible for income-driven repayment plans.
However, a Federal Direct Consolidation loan that includes Parent PLUS loans may be eligible for Income-Contingent Repayment . The borrower must have entered repayment on or after July 1, 2006, per the regulations at 34 CFR 685.208.
A parent PLUS loan in the Direct Loan program or the Federal Family Education Loan Program is eligible if it is included in a Federal Direct Consolidation Loan.
Income-contingent repayment bases the monthly payment on 20% of the borrowers discretionary income, which is defined as the amount by which the borrowers adjusted gross income exceeds 100% of the poverty line.
The remaining loan balance is forgiven after a 25-year repayment term . Generally, the IRS treats cancelled debt as taxable income for student loan borrowers. But, the American Rescue Plan Act of 2021 made all student loan forgiveness tax-free through 2025.
An income-contingent repayment plan is the only income-driven repayment program available to a parent PLUS borrower. To qualify for this parent student loan forgiveness, a borrower must consolidate their PLUS loan into a Direct Consolidation Loan, and repay the consolidation loan under the income-contingent repayment plan.
Student Loan Forgiveness For Disability: How To Discharge Debt
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Does Tpd Discharge Affect Taxes
Thanks to the new tax code that went into effect early this year, the disability discharge of federal student loans is now tax-exempt. Previously, this discharge had to be reported as taxable income and could mean a pretty hefty tax bill when the time came. However, take note this only applies to discharges during 2018 through 2025.
Private Student Loan Forgiveness Due To Disability
If you borrowed from a bank, credit union or another private lender, your access to loan forgiveness, even in cases of disability, is likely more limited. However, some lenders will forgive your remaining balance in the case of a disability or death.
If your lender offers this option, be prepared to provide documentation of your disability. Each lender will have a unique application process and qualifying criteria.
| Private student loan lenders that offer student loan disability discharge | Fine print |
|---|---|
| Laurel Road | Primary borrower only Lender may forgive some or all of the debt if the borrowers permanently disability affects their income Only for loans originated after the spring of 2015 |
| Disability: Federal loan-like verification standards Death: A certified copy of the borrowers death certificate could be required | |
| Parent loans are forgiven if the student beneficiary is dead or becomes disabled |
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Bill Allows Student Loan Forgiveness For Families Suffering From Childs Permanent Disability
WASHINGTON, D.C. U.S. Senator Chris Coons today introduced Domenic and Eds Law, legislation to allow a parent whose child develops a total and permanent disability to qualify for student loan discharge. This legislation was originally part of the Senators Stop Taxing Death and Disability Act which would both amend the Higher Education Act to provide student loan forgiveness to parents who take out loans for their children and also change the Internal Revenue Code to exempt individuals from the tax liability created by the forgiveness of their student loans in cases of death and disability.
We have constituentshardworking Americanswho bear the burden of student loan debt in the face of their child’s total and permanent disability, said Senator Coons. Our legislation to eliminate the tax on discharged federal student loans for students who experience a total and permanent disability was signed into law in 2017. However, parents who borrow federal funds on their child’s behalf still need relief if the child become totally and permanently disabled. I urge my colleagues from both sides of the aisle to fix this inequity and provide the relief these families deserve.
The federal government authorizes the forgiveness of certain federal loans in the case of total and permanent disability of the borrower, including:
Domenic and Eds Law will:
What Are Parent Plus Loans
When paying for higher education, students may sometimes need more financial aid than theyre eligible to receive from federal student loans in their own name. When this happens, federal Parent PLUS student loans may help fill the gaps. To be eligible for a Parent PLUS Loan, the borrower must be the biological or adoptive parent of the student, and must not have an adverse credit history.
With a Parent PLUS Loan, the parent can borrow up to the cost of attendance at the students school, minus any other financial assistance the student has received.
These loans are unsubsidized, which means the parent is responsible for the interest that accrues while the student is in school. Parents can choose to make interest-only payments while their child is in school or have the interest capitalize .
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Will Parent Plus Loans Be Included In Student Loan Forgiveness
Parent PLUS loans are eligible for several of the same student loan forgiveness programs as federal student loans for students, including:
Borrower Defense Loan Discharge
Total and Permanent Disability Discharge
Public Service Loan Forgiveness
That said, Parent PLUS loans generally have fewer repayment options in the first place and the eligibility requirements for these forgiveness programs can be strict and may require borrowers to consolidate their PLUS loan, such as with PSLF. This can make it tricky for borrowers to navigate how to use these federal relief programs to their advantage.
Refinancing is another option for Parent PLUS loan borrowers applying for a new private student loan with an, ideally, lower interest rate. That said, some lenders offer less flexibility for repayment and the fine print can be lengthy, so theres an inherent risk associated with refinancing Parent PLUS loans. Its also worth noting that refinancing a PLUS loan will eliminate it from any federal repayment plans or forgiveness options.
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Parent Plus Loans May Be Forgiven If The Parent Or The Child Dies
If you die or your child who benefitted from the Parent PLUS Loan dies, the loan may be eligible for a death discharge. The loan servicer must be provided with proof of death which can be in the form of an original death certificate, a certified copy of the death certificate, or a photocopy of either. Contact your loan servicer to check on further documentation requirements.
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Borrower Defense To Repayment
If you attended a school that you feel misled you or engaged in other misconduct in violation of the law, you may be eligible for discharge of your federal student loans through borrower defense to repayment. To apply for federal loan discharge based on borrower defense, complete an online application
. You can also contact us for an application.
How To Apply For Tpd Discharge
The Department of Health has agreements with the Social Security Administration and VA that allow them to determine who qualifies for a TPD discharge. If they think you might qualify, theyll contact you to let you know next steps. If youre contacted based on information received from the SSA or VA, you dont have to provide supporting documents.
If you havent been contacted and believe you meet the requirements above, you can fill out the application, attach supporting documents, and mail it in to the Department.
If youre unable to complete the application on your own, your representative can complete and submit your TPD discharge application on your behalf. With this option, your representative will have to complete an Applicant Representative Designation form. This has to be submitted and processed before theyre able to work with your representative.
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