Quick Answer: How do parent PLUS loans work for divorced parents?

If a student’s parents are divorced, both the custodial and non-custodial parent may borrow a PLUS Loan for their dependent, undergraduate student. A step-parent may only borrow a PLUS Loan if they are married to the custodial parent and their financial information was reported on the FAFSA of record.

Can divorced parents get parent PLUS loans?

If the student’s parents are divorced, both the custodial parent and the noncustodial parent are eligible to borrow from the PLUS loan program, provided that the combined amounts borrowed do not exceed the cost-of-attendance minus aid received cap.

How are parent PLUS loans handled in divorce?

But when it comes to student loan debt and divorce, the person who took out the loan is typically responsible for paying the loan, even in divorce. Only one of the spouses can sign the promissory note on Parent PLUS Loans, so technically that’s who is responsible for the student loan in the case of divorce.

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Are both parents liable for 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.

Can parent PLUS loans be transferred to the other parent?

“A direct PLUS loan made to a parent cannot be transferred to the child. You, the parent, are responsible for repaying the loan,” says the Department of Education’s student loan website. … The PLUS loan goes away, repaid by the child’s new private loan, with new terms and conditions.

What is the maximum amount for a parent PLUS loan?

1. You can borrow as much as you need. Unlike other types of federal student loans, Parent PLUS Loans have virtually no limits when it comes to borrowing. You can borrow up to the cost of attendance minus any other financial aid received.

Do parent PLUS loans have to be paid back immediately?

Parent PLUS loans need to be repaid right away unless they are deferred. When you take out a parent PLUS loan, a direct loan granted by the U.S. Department of Education to parents, you’re expected to begin repayment immediately after the loan is disbursement.

Does student loan debt get split in a divorce?

Legally, any student loan debt you incurred before getting married is considered separate property and remains so after the divorce (unless a prenup states otherwise). So if you borrowed $70,000 to attend law school before marrying your spouse, that debt is yours.

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Can parent PLUS loans be 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.

How do I get rid of my parent PLUS loan?

There are two main ways to get parent PLUS loan forgiveness: through the Public Service Loan Forgiveness program and through the Income-Contingent Repayment plan. Public Service Loan Forgiveness involves a lot of red tape but is the better option if you qualify.

What is the typical repayment period for a Direct PLUS loan?

Generally, you’ll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. Your required monthly payment amount will vary depending on how much you borrowed, the interest rates on your loans, and your repayment plan.

Do parent PLUS loans Transfer to spouse?

Your spouse or child can transfer the Parent PLUS Loan into their name if they have a good credit score (e.g., 680+) and a steady income that shows they can afford to pay back the college debt plus their living expenses.

Is a parent PLUS loan in the student’s name?

If you’re wondering how to transfer a parent PLUS loan to a student, we have good news: The student can take on the loan by refinancing it in their own name. As long as the student can qualify for refinancing on their own, they can assume full responsibility for the loan.

How do I transfer my parent PLUS loan to my child?

If you want to transfer responsibility for the debt to your child, you can:

  1. Refinance the parent PLUS loan into a private loan in your child’s name once they can meet the qualifications.
  2. Co-sign a private refinancing loan if your child can’t qualify, and work to meet the lender’s co-signer release requirements.
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What happens to a parent PLUS loan if the parent dies?

What happens to my parent’s PLUS loan if my parent dies or if I die? Your parent’s PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.

Can parent PLUS loans be consolidated?

Parent PLUS loan consolidation

When you consolidate parent PLUS loans, they become a federal direct consolidation loan. You can consolidate even if you only have a single parent PLUS loan. You’ll have 10 to 30 years to repay the consolidated loan, depending on the loan balance.