A Parent's Guide to Student Loan Forgiveness

Are you the proud parent of a college student? If so, chances are you might also be the owner of an overwhelming parent plus loan. While you are surely happy for your child, you don't want to repay their education expenses forever, right? Luckily, there are several student loan forgiveness programs to help refinance student loans and parent plus loans.

Loan forgiveness programs can be very beneficial, for both peace of mind and wallet. Avoid loan default with parent plus loan forgiveness programs, and more! After all, you don't want to find yourself in student loan bankruptcy territory (yikes!) In this comprehensive parental guide to student loan forgiveness, we'll discuss the best options for consolidating student loans and debt forgiveness.

Parent Plus Loan: Overview

By now, you might already be aware of the ins and outs of direct parent plus loans. However, it's always useful to have a brief recap of all the essential information you need to know as a parent borrower.

●     There is a fixed interest rate of 7% (though this may change annually).

○   For current disbursements made on or after July 1, 2017 until July 1, 2018.

●     You repay the loan provider directly (U.S Department of Education).

●     You begin repayment as soon as the loan is fully disbursed.

●     There are several student loan repayment plans available.

●     If you have trouble repaying, deferment or forbearance options are available.

Student Loan Forgiveness: Your Options

If you have difficulty repaying student loans, there are resources to help you. You can either temporarily halt payments, reduce the payment amount, or have the loans entirely forgiven.

Deferment vs Forbearance

Deferment means that you can request to postpone payments. However, interest will still accrue during this grace period.

If you have a direct parent plus loan and you request a deferment, you are still responsible for paying any interest that accrues. You can either pay the accrued interest off immediately, or let it be capitalized on your principal loan amount.  

With forbearance, the rules are a bit clearer as there will always be interest that accrues, no matter the type of student loan you have. Forbearance requests allow the borrower (student or parent) to temporarily put a halt on making payments. As with mostly everything, conditions do apply.

Repayment Plans

There are three types of repayment plans available to parent borrowers of a direct parent plus loan:

●     Standard - Fixed monthly payments for up to 10 years.

●     Graduated - Start payments off at a lower rate, and slowly increase. Up to 10 years.

●     Extended - Pay off your parent plus loan over the course of 25 years (graduated or fixed rate).

Loan Forgiveness (Discharge or Cancellation)

There are certain criteria you need to satisfy in order to get your student loans forgiven or cancelled.

Loan forgiveness (in part or in total) is possible under certain circumstances:

●     In the case of death.

●     In cases of bankruptcy, you need to show proof that repaying the loan would mean severe hardship.

●     If you become totally or permanently disabled.

●     The student withdrew, or the university closed before the student could finish the program.

●     ..and more.

For the complete list of criteria regarding parent plus loan forgiveness, see here.

Student Loan Forgiveness: Important Reminders

It is important to remember that you must first qualify for debt forgiveness. If in doubt, discuss student loan relief and loan forgiveness programs with your loan provider.

While your request for loan discharge is under review by your loan provider, you must continue to make payments. Loan default can make your loan delinquent. Loan delinquency can negatively impact your credit and may result in unwanted consequences.

If your request for loan forgiveness is denied, the decision is usually not repealed. If your request is accepted, you no longer have to make payments on your parent plus loan.

See here for more answers to commonly asked questions.

A Parent's Guide to Student Loan Forgiveness: Recap

While there may be a few steps to take for satisfying student loan forgiveness criteria, just knowing that there are options available should relieve you just a bit. Repaying student loan debt is quite the daunting task. But it doesn't have to be.

Whether you need complete debt relief or simply loan refinancing, federal student loan forgiveness programs have great resources to help you out. They are just a call or click away. With a repayment plan that works for you, you can avoid loan bankruptcy and loan default. Trust me, both you and your loan provider want to see your student debt taken care of.

Above all, remember that student loan forgiveness is possible. Now you can be even prouder of your college grad!