Can PLUS Loans Be Forgiven? How the Process Works

PLUS loans are federal student loans for graduate or professional students and parents of dependent undergraduate students, helping cover educational expenses. While designed for repayment, various federal programs offer pathways for forgiveness or discharge under specific conditions. These options provide relief from repayment obligations for those facing certain circumstances or engaging in specific types of employment.

Understanding PLUS Loan Forgiveness Programs

Several federal programs offer potential pathways for PLUS loan forgiveness or discharge. Public Service Loan Forgiveness (PSLF) is for borrowers working in qualifying public service jobs, supporting individuals in government or non-profit sectors.

Income-Driven Repayment (IDR) plans can also lead to forgiveness, typically after a longer repayment period. These plans adjust monthly payments based on income and family size, with any remaining balance forgiven after a specified number of years. This approach helps manage payments for those with financial hardship.

Discharge options are available for specific situations, such as Total and Permanent Disability (TPD) or the death of the borrower. These discharges alleviate debt burdens when repayment becomes impossible due to severe disability or loss. A School Closure Discharge may also be an option if the educational institution closes before program completion.

Bankruptcy discharge for student loans is rare and requires a rigorous legal process. While possible, it is not an easily accessible route for loan forgiveness.

Specific Eligibility Requirements

Eligibility for Public Service Loan Forgiveness (PSLF) requires borrowers to work full-time for a qualifying employer, including government organizations and eligible non-profit organizations. Borrowers must make 120 qualifying monthly payments while employed by these organizations. Only Direct Loans qualify for PSLF; Parent PLUS loans must first be consolidated into a Direct Consolidation Loan to become eligible. These 120 payments must be made under a qualifying Income-Driven Repayment (IDR) plan.

For Income-Driven Repayment (IDR) plan forgiveness, Parent PLUS loans must be consolidated into a Direct Consolidation Loan to qualify for any IDR plan. The Income-Contingent Repayment (ICR) plan is the only IDR option available for consolidated Parent PLUS loans. Any remaining loan balance is forgiven after 25 years of payments. Forgiven amounts under IDR plans are currently tax-free until December 31, 2025.

Total and Permanent Disability (TPD) Discharge is available to borrowers unable to engage in any substantial gainful activity due to a physical or mental impairment. Qualification can occur in one of three ways: a determination by the Department of Veterans Affairs (VA) of a 100% disabling service-connected disability, a Social Security Administration (SSA) notice of award for SSDI or SSI benefits indicating a review period of 5-7 years or more, or a physician’s certification. Following discharge, a three-year monitoring period applies, during which the discharge can be reversed if certain conditions are not met, such as exceeding income limits or returning to school.

Death Discharge applies if the borrower of a PLUS loan passes away. For a Parent PLUS loan, the loan is discharged upon the death of either the parent borrower or the student on whose behalf the loan was taken. This discharge requires official documentation of death.

School Closure Discharge is an option if the school the student attended closed before program completion. This discharge is available if the school closed while the student was enrolled or within a specific timeframe after withdrawal. Conditions include the student not having completed their program at the closed school and not having transferred credits to another institution to complete a comparable program.

Bankruptcy discharge for student loans is difficult to obtain, requiring the borrower to prove “undue hardship” in an adversary proceeding. This involves demonstrating that repayment would prevent the borrower and their dependents from maintaining a minimal standard of living, that this financial state will persist for a significant portion of the repayment period, and that good faith efforts have been made to repay the loan. Courts apply varying interpretations of this “undue hardship” standard.

The Application Process for Forgiveness

Applying for Public Service Loan Forgiveness (PSLF) involves tracking and verifying eligible employment and payments. Borrowers should submit the PSLF Employment Certification Form (ECF) annually or whenever they change employers. This form confirms employment qualification and payment count toward the 120 required. Forms are available on StudentAid.gov and can be submitted online or via mail to the loan servicer.

For Income-Driven Repayment (IDR) forgiveness, the process involves enrolling in an eligible IDR plan and annually recertifying income and family size. Forgiveness occurs automatically after the required 20 or 25 years of payments. Consistent recertification ensures accurate monthly payment calculations and continued progress. Borrowers can apply for an IDR plan and manage recertification through StudentAid.gov or by contacting their loan servicer.

To apply for Total and Permanent Disability (TPD) Discharge, borrowers submit an application through Nelnet Total and Permanent Disability Servicing. This application requires documentation, such as a VA determination, SSA notice of award, or a physician’s certification. After initial approval, the borrower enters a three-year monitoring period, during which compliance with specific requirements is necessary to maintain the discharge.

Obtaining a Death Discharge requires a representative of the deceased borrower’s estate, or next of kin, to provide a certified copy of the death certificate to the loan servicer. Upon receipt and verification, the loan obligation is discharged.

Applying for a School Closure Discharge involves contacting the loan servicer or visiting StudentAid.gov. Borrowers provide documentation related to enrollment at the closed school and evidence they did not complete their program or transfer sufficient credits. The servicer reviews the application to determine eligibility based on federal guidelines.