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PSLF, Grad Plus, and Parent PLUS options

Started by gradensmom, August 07, 2017, 07:08:18 am

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gradensmom

Hello. I'm a high school teacher who will finish her Master's this fall semester at which time I'll need to start repaying my 25,000 in Grad PLUS Direct loans. Meanwhile, my son will be entering college next fall, and I'm considering taking Parent PLUS loans to help him through college.

If I start making ICR payments on my loans, can I add my Parent PLUS loans to my balance in an effort to receive forgiveness after 10 years because I work in public service? How would this work if it is possible?

TheCollegeInvestor

Hey /u/gradensmom - so, your loans are PSLF eligible and you should take advantage of that for sure. However, if you add in the Parent PLUS loans, it can become a mess.

I highly recommend two things:
1. Do NOT take out the Parent PLUS Loans. I'm a strong believer that parents should NEVER borrow money for their children's education. Here's an article I wrote for Forbes that explains all the reasons why it's a bad idea: https://www.forbes.com/sites/robertfarrington/2014/07/14/parents-stop-taking-out-loans-for-your-childs-college-education/#473a42ea60a6

2. If you go against my advice there, do NOT consolidate your PLUS loan with your other loans. Keep them separate. You can attempt a backdoor ICR forgiveness for them, but since we haven't even seen the first round of PSLF approved, I couldn't tell you if that would be successful or not. Here's an article about it: https://thecollegeinvestor.com/17101/options-if-you-cant-afford-your-parent-plus-loans/

gradensmom

Thank you for your advice; however, I may need to take out loans for my son. The second article says, "there is a potential workaround that will allow some borrowers to convert their Parent PLUS Loan into a Federal Direct Consolidation Loan. This simple change will allow borrowers to qualify for income-contingent repayment (ICR), and also for Public Service Loan Forgiveness (PSLF)." Your advice was to avoid consolidating my loans with the ones I take out for my son. Can you tell me what potential problems may exist?

TheCollegeInvestor

First, you don't "need" to - he can pay for college on his own. Trust me, I see it daily.

And yes, don't consolidate. You're pretty much guaranteed with your loans, it's not a guarantee with the Parent PLUS Loans (it's a "potential" workaround).

You can keep both loans separate and still apply for PSLF for each loan. It's an extra step, but a much, much safer step.