Selling your house to a cash buyer is a quick and easy way to get your home off of your hands. Click here to learn more about this home-selling option.
Business & Finances Legal

How to Get Yourself Out of Parent Plus Debt

Paying for your child’s college education sometimes requires that we either get creative or take out a loan. Over 600,000 parents did just that by taking out a Parent PLUS loan. This type of loan helps students to pay for books, tuition, housing, and other education related costs that they might have. As opposed to a student loan, a Parent PLUS loan is completely in the parent’s name, and they are responsible for paying it back. 

Unfortunately, between taking out the loan and paying it back, circumstances can change. Or, maybe you took out a loan that was too big for you to handle because you wanted your child to go to college. Whatever the reason, if you’re in a tight spot, there are some options available to you. Here’s how you can get yourself out of Parent PLUS debt. 

Change Your Payment Plan

It’s always best to contact your loan administrator to see if you can adjust your plan. This will either let you pay off your loan faster, or pay it off in lower amounts that you can afford. If you are able, then think about applying any bonuses or raises from your work towards your student loan. 

There are three payment plans that you can choose from when it comes to a Parent PLUS loan. They all have their own pros and cons. The standard repayment plan is the most common. It has a 10 year repayment term. It has slightly higher payment amounts which means that more is going towards the principal and you pay less in interest.

The graduated repayment plan starts off with lower payments that gradually get bigger through the life of the loan. This is good for people who are expecting their income to grow over time. Finally there’s the extended repayment plan, which has low monthly payments, but a longer repayment period. You will end up paying more in interest, but the small payments make it more manageable. 


Refinancing is another good option to lower your payments and even the interest rate that you’re paying. When you are applying, you can use your lender’s loan calculator to see how much you would save by refinancing. Refinancing can get you out of debt much faster while also saving you hundreds of dollars in interest. There are also options to refinance under your student’s name so they assume the responsibility. 


If you have other loans under your name as well as a Parent Plus loan, it might be a good idea to consolidate them under a single loan. What this can do is extend the repayment term and give you lower monthly payments. You’ll pay more money towards interest, but it will make your payments more manageable.

Consolidation can come from a Direct Consolidation Loan form the federal government. If you consolidate under this loan option, you will be eligible for their program that allows loan forgiveness based on your income. It will cap your monthly payments at either 20% of your income, or how much you would pay if your repayment plan was in place over 12 years. Then, the repayment is spread over 25 years, and whatever is left over is forgiven. This option is not available if you have a Parent PLUS loan. 

A Repayment Plan Based On Income

In August of last year, the federal government made changes to how repayment plans were calculated. The goal was to reduce monthly payments and make it easier to pay off debt related to education. This makes it so that borrowers will pay up to 5 % and no more than their discretionary income. Prior to that, it was 10%. It also forgives loans after the borrower has demonstrated 10 years of regular payments, and helps the borrower with unpaid monthly interest. That way a loan will not grow while the borrower is making payments. 

Unfortunately, It’s easy to get into trouble when you take out student loans for your children. You want them to get an education, and that costs money. Taking out a Parent PLUS loan is a great idea, but if you overextend yourself then you’ll be in financial difficulty before you know it. Also, some people just want to be out of debt as soon as possible, regardless of their financial situations. Use these tips to make Parent PLUS loans more manageable and to get out of debt quicker. 


Leave a Reply