There may be something worked out as part of the divorce, but the person who signed the promissory note is still usually the one liable for the debt. But that doesn’t mean a family court won’t include that debt as part of the expenses and decide it should be covered by both parties.
How do parent PLUS loans work for divorced parents?
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.
Are both parents responsible for parent PLUS loans?
PLUS loans are federal loans that parents can take out to cover their child’s college costs. The parent, not the student, is responsible for repaying the PLUS loan. PLUS loans don’t qualify for all of the income-driven repayment plans that student loans do.
Is spouse responsible for 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.
Who is the primary borrower on a parent PLUS loan?
Parent PLUS Loan vs. Private Loan
|Parent PLUS Loan||Private Student Loan|
|Primary Borrower||Parent of a dependent undergraduate student||Parent or Student|
|Cosigner Required||Only if parent has an adverse credit history||Cosigner may be required|
|Lender||Federal government||Private lenders and financial institutions|
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.
Can both divorced parents apply for parent PLUS loan?
If a student’s parents are divorced, both the custodial and non-custodial parent may borrow a PLUS Loan for their dependent, undergraduate student.
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 happens to a parent PLUS loan in a 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.
What happens if you don’t pay a parent PLUS loan?
Not paying parent PLUS loans can eventually lead to default. This happens after 270 days of missed payments. At this point, your priority should be returning the loans to good standing. There are three ways to get out of student loan default for federal loans: repayment, rehabilitation and consolidation.
How long do you have to pay off a parent PLUS loan?
You will be repaying the debt for 10-25 years regardless of the option you select. Choose a parent PLUS Loan repayment option that works for you and your family and stay the course. Parent PLUS loans do not have prepayment penalties, You can pay off the loans sooner than 10 years by making extra payments on the debt.
What is the difference between a PLUS loan and a parent PLUS loan?
A Direct PLUS Loan is commonly referred to as a parent PLUS loan when made to a parent borrower. Looking to apply? Use the online application to apply for a parent PLUS loan. Important: Most schools require you to submit the PLUS loan application online, although some schools have different application processes.