Parent PLUS Loan Forgiveness During Covid

2026 Rule ChangesLowering Monthly PaymentsForgiveness & DischargeTransferring Debt to ChildDeferment & ForbearancePayment Hardship OptionsBankruptcy Discharge

Parent PLUS loans have fewer repayment and forgiveness options than other federal student loans. If your consolidation loan isn’t disbursed by June 30, 2026, you permanently lose access to income-driven repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. and forgiveness.

What's Changing on July 1, 2026

The One Big Beautiful Bill Act changed the rules for Parent PLUS loans. Parent PLUS is one of several federal student loan programs affected by changes taking effect in mid-2026 — the full timeline covers deadlines for IDR, PSLFPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer., Grad PLUS, and more.

Access to income-driven repayment ends for new consolidations. Parent PLUS borrowers who consolidate into a Direct Consolidation Loan after June 30, 2026, cannot enroll in Income-Contingent RepaymentIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation. (ICR), Income-Based Repayment (IBR), or any other income-driven plan. The new Repayment Assistance Plan (RAP) also excludes Parent PLUS loans. That leaves the Standard Repayment PlanStandard Repayment PlanThe default federal repayment plan, which spreads loan payments evenly over 10 years — or up to 30 years for consolidation loans. It usually results in the lowest total interest paid among federal plans. — fixed monthly payments that don’t adjust for income.

The deadline is disbursement, not application. Your consolidation loan must be fully disbursed by June 30, 2026. That’s the date the new loan is issued, not the date you submit the application. Consolidation processing typically takes 4–8 weeks, and high volume could extend that. The Department of Education has urged borrowers to apply by March 2026 to allow enough processing time.

New Parent PLUS loans after July 1, 2026, are even more restricted. Future borrowers face annual caps ($20,000 per student per year) and aggregate limits ($65,000 per student). New loans will only be repayable under the Standard Repayment Plan — no income-driven options at all. A legacy provision allows parents who borrowed before July 1, 2026, to continue under the old unlimited borrowing rules for up to three more years, but only if the student remains in the same school and program.

Mixing old and new loans eliminates your options. If you take out even one new Parent PLUS loanParent PLUS LoanA federal Direct PLUS Loan taken out by the biological, adoptive, or stepparent of a dependent undergraduate student. The parent is legally responsible for repayment, not the student. after July 1, 2026, all of your Parent PLUS loans — including existing ones — must be repaid under the Standard Repayment Plan. This applies even if you were already enrolled in ICR.

Related: Parent PLUS Loan Consolidation

How to Lower Your Monthly Payment

Parent PLUS loans aren’t directly eligible for income-driven repayment. But once you consolidate into a Direct Consolidation Loan, you can enroll in the ICR plan, which bases payments on your income rather than your loan balance.

After making one payment on ICR, you can switch to the IBRIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments. Plan, which typically lowers monthly payments. This path is available only if your consolidation loan is disbursed before June 30, 2026. You do not need to be enrolled in ICR before that date — consolidation is the step that matters.

Related: Parent PLUS Loan Repayment Options

How to Get Your Parent PLUS Loan Forgiven

Parent PLUS loans can reach forgiveness through two federal programs. Both require consolidating into a Direct Consolidation Loan first.

ICR forgiveness after 25 years. Enroll in ICR after consolidation and make 300 qualifying monthly payments. The remaining balance is forgiven. The forgiven amount is taxable under current law — the American Rescue Plan Act exemption expired December 31, 2025.

Public Service Loan Forgiveness (PSLF) after 10 years. If you work full-time for a qualifying government or nonprofit employer, you can receive tax-free forgiveness after 120 qualifying payments. Parent PLUS borrowers must consolidate and enroll in ICR (the only qualifying plan for Parent PLUS borrowers) to make PSLF-eligible payments. Missing the June 30, 2026, consolidation deadline eliminates the PSLF path entirely — there would be no eligible repayment plan.

Other discharge paths. Total and Permanent Disability (TPD) discharge is available for permanently disabled parent borrowers. Loans are also discharged if the parent borrower or the student for whom the loan was taken dies. Closed school dischargeClosed School DischargeA federal loan discharge available to borrowers whose school closed while they were enrolled or shortly after they withdrew, before they could complete their program of study. applies if the school closes while the student is enrolled or shortly after the student withdraws.

Related: Parent PLUS Loan Forgiveness: Your Options, Timeline, and Deadlines

How to Transfer a Parent PLUS Loan to Your Child

No federal program transfers a Parent PLUS loan from the parent’s name to the student’s name. The only way to move the debt is through private refinancingRefinancingTaking out a new private loan to pay off one or more existing student loans, usually to lower the interest rate or change the repayment term. Refinancing federal loans into a private loan eliminates federal benefits like IDR and PSLF. — the child takes out a new private loan to pay off the parent’s federal loan.

This is a permanent trade. The parent is released from the debt, but the child takes on a private loan with no access to income-driven repayment, federal forgiveness, deferment, or forbearance. Whether the trade-off makes sense depends on the child’s income and credit, the parent’s need for federal protections, and the interest rate difference.

Related: Can You Transfer a Parent PLUS Loan to Your Child?

Temporary Payment Relief

Forbearance and deferment allow you to temporarily pause or reduce payments. Neither is a long-term solution — interest continues to accrue in both cases.

Deferment is available while the student is enrolled at least half-time, or during economic hardship or unemployment. You must request it from your servicer.

Forbearance allows you to pause payments for up to 12 months at a time. It’s easier to obtain than a deferment but has the same cost: unpaid interest adds to what you owe.

Both options can buy time to consolidate and enroll in ICR before the June 30, 2026, deadline. If you’re using forbearance as a bridge to consolidation, start the consolidation application immediately — don’t wait for the forbearance period to end.

Related: Parent PLUS Loan Forbearance

What to Do If You Can't Afford Your Payments

If you’re behind on payments or about to be, your options depend on whether your loan is in good standing or already in defaultDefaultThe status of a federal student loan after the borrower has failed to make required payments for 270 days. Default can trigger collection actions such as wage garnishment, tax refund offset, and damage to credit reports..

If your loan is current: The payment-reduction path described above — consolidation into ICR, then switching to IBR — is the starting point. If that still isn’t enough, the full guide covers additional options, including home equity strategies and refinancing.

If your loan is in default: You can still consolidate a defaulted Parent PLUS loan into a Direct Consolidation Loan, which brings the loan out of default and opens access to repayment plans. Loan rehabilitationRehabilitationA federal program for borrowers in default that requires nine voluntary, on-time monthly payments over ten months. After rehabilitation, the default is removed from credit reports and federal aid eligibility is restored. It is available once per loan. is another path — nine on-time payments remove the default from your credit report. Settlement may also be available for defaulted loans.

Related: Can’t Pay Your Parent PLUS Loan? 6 Solutions to Take Control

Bankruptcy Discharge for Parent PLUS Loans

Parent PLUS loans can be discharged in bankruptcy, but it requires filing an adversary proceedingAdversary Proceeding (AP)A separate lawsuit filed within a bankruptcy case, required to seek discharge of student loans. The borrower files the AP against the loan holder and asks the court to find undue hardship. — a separate lawsuit within the bankruptcy case.

This is a legal process, not an administrative one. The borrower must demonstrate that repaying the loan would cause undue hardshipUndue HardshipThe legal standard a borrower must meet to discharge federal student loans in bankruptcy under 11 U.S.C. § 523(a)(8). Courts apply different tests, most commonly the Brunner Test or the Totality of the Circumstances Test. — a standard that requires showing inability to maintain a minimal standard of living, persistence of the hardship, and good-faith efforts to repay.

Bankruptcy discharge is typically pursued by borrowers who have explored other options — consolidation, income-driven repayment, forbearance — and still face a debt burden their income can’t support. Parents approaching retirement with large Parent PLUS balances and limited income are among the most common candidates.

Related: Parent PLUS Loan Bankruptcy Discharge