If you borrowed money in the form of a Parent PLUS Loan to finance your child’s college education, then you may be wondering if you qualify for any tax breaks. Good news: As a Parent PLUS borrower, you are eligible to claim the Student Loan Interest Deduction on your taxes.
Are Parent PLUS loans considered federal loans?
Direct PLUS Loans are federal loans that parents of dependent undergraduate students can use to help pay for college or career school. PLUS loans can help pay for education expenses not covered by other financial aid.
Are Parent PLUS loans ever forgiven?
Under this plan, parent PLUS loans are forgiven after 25 years of repayment. To qualify, borrowers must convert their PLUS loans into a federal direct loan by consolidating their student debt. You can complete the application to consolidate parent PLUS loans online at StudentAid.gov.
Does Parent PLUS loan affect debt-to-income ratio?
When you apply for a Direct PLUS Loan for your child, the government will check your credit report, but not your income or debt-to-income ratio. In fact, it does not even consider what other debts you have. The only negative thing it looks for is an adverse credit history.
Who pays a parent PLUS loan?
Only the parent borrower is required to pay back a Parent PLUS Loan, as only the parent signed the master promissory note for the Parent PLUS Loan. The student is not responsible for repaying a Parent PLUS Loan.
What happens to my parent PLUS loan when I retire?
Repayments are capped at 20% of discretionary income, which may be lower once a client is in retirement. After 25 years of making qualified payments, any remaining debt is forgiven. The Public-Service Loan Forgiveness program may apply to parents who work for government or many non-profit employers.
Are Parent PLUS loans eligible for IDR?
While PLUS loans are not eligible for IDR, you can always consolidate such loans. If you consolidate them into a Federal Direct Consolidation Loan, such loans are now eligible for the ICR income-driven repayment plan. … If you only pay the minimum amount each month, you will be making ICR payments for up to 25 years.
How can I lower my parent PLUS loan?
If you want to pay off parent PLUS loans quickly, refinancing to a lower interest rate can help you become debt-free faster and save you money in interest. You can refinance parent PLUS loans in your name, or the child can take over the PLUS loan by refinancing it in his or her own name.
How much is the average parent PLUS loan?
The average parent PLUS loan debt is $28,778. The average outstanding parent PLUS loan debt is $28,778, according to federal loan data. Parent PLUS loans are federal direct loans parents can use to pay for their dependent child’s education.
What is a benefit of a PLUS loan?
Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school. PLUS loans can help pay for education expenses not covered by other financial aid.
What happens if a parent defaults on a parent PLUS loan?
While your parent PLUS loans are in default, the government can garnish your wages and take your tax refunds and Social Security checks, among other consequences. Defaulted loans also aren’t eligible for different repayment plans, or deferment or forbearance.
Which parent should apply for parent PLUS loan?
Which of my parents should apply for the Parent PLUS Loan? The parent whose information is listed on the FAFSA will be the one who will apply for the Parent PLUS Loan.