At the end of the day, there are statutory limitations on Parent PLUS Loans that only Congress can address. Income-Driven Repayment Plans
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Repayment Plans Available To Parent PLUS Loans: Income-Driven Repayment Plans
Borrowers of Federal Parent PLUS loans are eligible for Standard Repayment, Graduated Repayment, and Extended Repayment, but not income-driven repayment plans. Income-Driven Repayment Plans
If a Parent PLUS loan is included in a Federal Direct Consolidation Loan made on or after July 1, 2006, the consolidation loan is eligible for Income-Contingent Repayment (ICR), but not any of the other income-driven repayment plans.
There is a loophole called double-consolidation, which makes consolidation loans that include Parent PLUS loans eligible for any income-driven repayment plan, but this loophole will end on July 1, 2025.
While some members of Congress wrote a letter last year urging the President to make Parent PLUS loan borrowers eligible for the SAVE repayment plan, it is Congress that passed legislation that blocks the U.S. Department of Education from offering income-driven repayment plans for Parent PLUS loans.
This legislation constrains what the U.S. Department of Education can do when issuing new regulations.
Statutory Limitations Blocking IBR and ICR Income-Driven Repayment Plans
The Higher Education Act of 1965 prevents Parent PLUS loans from qualifying for income-driven repayment plans based on ICR and IBR. [20 USC 1087e(d)(1)(D) and (
Paragraph D blocks Parent PLUS loans from being repaid under ICR: Income-Driven Repayment Plans
Federal Parent PLUS loans are ineligible for income-driven repayment plans, such as Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay-As-You-Earn Repayment (PAYE).
This has made Parent PLUS loans some of the most challenging student loans to repay for parents and families. They’ve even spawned Borrow and Die Student Loan Forgiveness strategies due to the nature of how they operate.
A group of Democratic lawmakers, including Sen. Elizabeth Warren and Sen. Bernie Sanders, want to change that and are urging the President and the Department of Education to expand relief to Parent PLUS Loan holders. There’s a proposed bill called the Parent PLUS Parity Act that could change that if it goes anywhere.
While some members of Congress wrote a letter last year urging the President to make Parent PLUS loan borrowers eligible for the SAVE repayment plan, it is Congress that passed legislation that blocks the U.S. Department of Education from offering income-driven repayment plans for Parent PLUS loans.
This legislation constrains what the U.S. Department of Education can do when issuing new regulations.
Statutory Limitations Blocking IBR and ICR
The Higher Education Act of 1965 prevents Parent PLUS loans from qualifying for income-driven repayment plans based on ICR and IBR. [20 USC 1087e(d)(1)(D) and (
Paragraph D blocks Parent PLUS loans from being repaid under ICR:
There is also language in the general provisions section of the Higher Education Act of 1965 that defines the terms “excepted PLUS loan” and “excepted consolidation loan.” [20 USC 1098e]
- An excepted PLUS loan is a Federal PLUS loan “that is made, insured, or guaranteed on behalf of a dependent student.”
- An excepted consolidation loan is a federal consolidation loan where “the proceeds of such loan were used to discharge the liability on an excepted PLUS loan.”
The rest of the statutory language in this section of the Higher Education Act of 1965 repeatedly has an exclusion “other than an excepted PLUS loan or excepted consolidation loan” that prevents Parent PLUS loans and consolidation loans that repaid Parent PLUS loans from qualifying for IBR.
Note that the statutory language at 20 USC 1087e(d)(1)(E) not only blocks Parent PLUS loans from qualifying for IBR but also consolidation loans that include Parent PLUS loans. In contrast, 20 USC 1087e(d)(1)(D) does not include similar language for consolidation loans, which is how Parent PLUS loans become eligible for ICR if the Parent PLUS loans are included in a consolidation loan.