Parents must also apply for a student loan waiver this month
President Joe Biden’s August 24 announcementwas great news for many student borrowers, and it was also a happy event for many parents of college students.
The currently proposed plan to forgive student loan debt for borrowers earning $125,000 a year or less includes parents who took out Parent PLUS loans to pay for their children’s college or graduate school education. Eligible parents can apply for student loan debt relief just like their children.
Parent PLUS loans include approximately 3.7 million families that owe a total of $104 billion, according to The Century Foundation — the average family debt is $29,600. Learn which parents and loans qualify for student loan forgiveness, and how parents can apply for up to $20,000 in debt forgiveness.
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What are Parents PLUS Loans?
Parent PLUS loans are federally funded student loans that parents can borrow to fund their children’s college education. Note that the acronym PLUS comes from the now obsolete name for the loans: — “Parental Loans for Undergraduate Students.” The Department of Education now calls Parent Loans Direct PLUS Loans.
Parent PLUS Loans are non-subsidised, meaning parents must pay interest while their children are in school. The fixed rate on Parent PLUS loans – currently 7.54% per bank rate – is also higher than student rates, currently 4.99%.
Which Parents Will Get Debt Relief With The White House Plan?
Parents who have Direct PLUS loans with the federal government and who earned less than $125,000 or $250,000 on a household in either 2020 or 2021 should qualify for at least $10,000 of debt relief once the White House plan comes into effect.
Even if you default on a Parent PLUS loan, you’re still eligible for debt relief.
What About Pell Grants, Parents, and Student Loan Forgiveness?
Students who received Pell Grants during their college education are eligible for up to $20,000 in student loan debt relief. This rule also applies to parents, however only if the parents themselves have received Pell Grants.
If a parent who did not receive a Pell Scholarship as a student holds a PLUS Loan for a child who received a Pell Scholarship, the parent Not qualify for the $20,000 forgiveness, only the $10,000. If a parent who received a Pell grant as a student takes out a loan for a child who did not receive a Pell grant, that parent does the same is eligible for $20,000.
How do parents apply for Parent PLUS student loan forgiveness?
Parents must apply for student loan forgiveness separately from their children. To do this, they access their FSA account to verify all their personal information and credit details. If theParents must submit a claim using their own account credentials.
What about parents with PLUS loans who also have student debt of their own?
As the plan stands, each student loan borrower is eligible for $10,000 to $20,000 in student loan forgiveness—regardless of whether the debt originated as a student or as a parent. Parents can apply for forgiveness on both their own student loans and their Parent PLUS loans, but total debt forgiveness is limited to $10,000 or $20,000.
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