Can a Parent Loan Be Forgiven? Your Options Explained

Parents often take on loans to help finance their children’s education, covering costs not met by other financial aid. The possibility of loan forgiveness for parents is not straightforward and depends on the specific loan type obtained.

Types of Parent Loans

Understanding the loan type is fundamental to determining any available forgiveness options. Parent loans primarily fall into two categories: federal Parent PLUS Loans and private parent loans.

Federal Parent PLUS Loans are provided by the U.S. Department of Education for parents of dependent undergraduate students. These loans have fixed interest rates, which for loans first disbursed between July 1, 2025, and July 1, 2026, are 8.94%, along with a loan fee of 4.228% for loans first disbursed on or after October 1, 2020. The parent is the borrower, taking on the direct responsibility for repayment, not the student. These federal loans offer certain protections and repayment flexibilities.

Conversely, private parent loans are offered by various private financial institutions, such as banks and credit unions. These loans operate under terms and conditions set by the individual lender, which can vary widely. Private loans generally have more stringent credit checks than federal PLUS loans. A crucial distinction is that private parent loans typically do not offer the same range of forgiveness or discharge options as their federal counterparts. The fundamental difference in loan origin impacts forgiveness potential. Federal loans, backed by the government, offer repayment relief or forgiveness under specific circumstances, unlike private loans which rarely include broad forgiveness provisions.

Federal Loan Forgiveness Programs

Federal Parent PLUS Loans can be eligible for certain forgiveness programs, though they often require specific steps like consolidation to qualify. Two primary federal programs that may offer forgiveness for these loans are Public Service Loan Forgiveness (PSLF) and Income-Contingent Repayment (ICR) forgiveness. The availability of these options is limited to federal loans and hinges on meeting strict criteria.

Public Service Loan Forgiveness provides a pathway to loan forgiveness for parent borrowers employed in qualifying public service jobs. To be eligible for PSLF, Parent PLUS Loans must first be consolidated into a Direct Consolidation Loan. The parent borrower must then work full-time for a qualifying employer, such as a U.S. federal, state, local, or tribal government entity, or a qualifying 501(c)(3) non-profit organization. After making 120 qualifying monthly payments under an income-driven repayment plan, the remaining loan balance may be forgiven. The forgiven amount under PSLF is not considered taxable income by the federal government.

The Income-Contingent Repayment (ICR) plan also offers a path to forgiveness for consolidated Parent PLUS Loans. Parent PLUS Loans are not directly eligible for most income-driven repayment plans, making consolidation into a Direct Consolidation Loan a necessary first step to enroll in ICR. Under the ICR plan, monthly payments are capped at the lesser of 20% of discretionary income or the amount that would be paid on a fixed 12-year repayment plan, adjusted for income. Any remaining loan balance after 25 years of qualifying payments under the ICR plan is forgiven. The forgiven amount under ICR may be considered taxable income by the IRS after December 31, 2025, unless Congress extends the current tax-free exclusion.

These forgiveness options are exclusively for federal Parent PLUS Loans and require specific actions, such as loan consolidation, to unlock eligibility. The parent’s employment type for PSLF or their income for ICR are significant factors determining eligibility and the potential for forgiveness.

Other Federal Loan Discharge Options

Federal Parent PLUS Loans may also be eliminated under certain severe and unforeseen circumstances through discharge options. These discharges are distinct from forgiveness programs and address situations where repayment becomes impossible or inequitable.

A death discharge is available if the parent borrower dies, or if the student on whose behalf the Parent PLUS Loan was taken dies. The loan obligation is discharged upon providing a certified copy of the death certificate to the loan servicer.

Total and Permanent Disability (TPD) discharge allows for the elimination of federal Parent PLUS Loans if the parent borrower becomes totally and permanently disabled. Eligibility for TPD discharge can be established through documentation from the Department of Veterans Affairs, the Social Security Administration, or a physician’s certification stating the disability prevents substantial gainful activity and is expected to result in death, has lasted at least 60 months, or is expected to last at least 60 months. If approved, the loan is discharged, though a three-year monitoring period may apply, during which certain conditions must be met to maintain the discharge.

Federal Parent PLUS Loans may also be discharged if the student’s school closes before the student completes their program. This school closure discharge is applicable if the student was enrolled at the time of closure or withdrew within a specific period, typically 90 to 180 days before the closure. Another discharge option is available for false certification, where the loan was certified by the school based on false information, such as the student’s ability to benefit from the training, unauthorized signatures on loan documents, or a disqualifying status that prevented employment in the trained occupation. If a Parent PLUS Loan was obtained due to identity theft, the borrower may pursue an identity theft discharge by contacting their loan servicer and providing necessary documentation, which may include a police report.

Applying for Forgiveness or Discharge

The application process for federal loan forgiveness or discharge involves specific steps and documentation, varying by the program or discharge type. Contacting the loan servicer is generally the initial step for any application. They can provide the necessary forms and guidance tailored to the borrower’s situation.

For Public Service Loan Forgiveness (PSLF) and Income-Contingent Repayment (ICR), Parent PLUS Loans must first undergo consolidation into a Direct Consolidation Loan. This process can be initiated online through the StudentAid.gov website. The consolidation application combines eligible federal loans into a single new loan, making them eligible for income-driven repayment plans like ICR, which is a prerequisite for PSLF for Parent PLUS borrowers.

Once consolidated, borrowers pursuing PSLF must submit the Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application Form (PSLF Form). This form requires certification of qualifying employment by the employer and is typically submitted annually or when changing jobs to track progress towards the 120 qualifying payments. For ICR, borrowers must submit the Income-Driven Repayment Plan Request form, providing updated income and family size information annually to adjust their monthly payment amount.

Applying for discharge options, such as death, Total and Permanent Disability (TPD), or school closure, requires providing specific documentation to the loan servicer. For a death discharge, a death certificate is necessary. For TPD discharge, documentation from the Social Security Administration, Department of Veterans Affairs, or a physician’s certification is required. School closure discharge applications typically involve forms provided by the Department of Education or the loan servicer, along with evidence of enrollment and the school’s closure. False certification and identity theft discharges also necessitate specific forms and supporting evidence, such as school records or police reports.