Part of what makes college financial aid so confusing is the sheer variety of different student loans. For example, the Parent PLUS loan is very different from a traditional Stafford Loan, and very different rules apply.
One of those rules involves the Income-Driven Repayment plan. Parent Loans are not eligible for Income Driven Repayment Plans.
Enrolling in an IDR plan is a way to cut down on monthly loan payments, especially if you’re enrolled in a loan forgiveness program. But are PLUS loans even eligible for IDR?
See also: Complete Guide to Parent Loans
The Income-Driven Repayment Plan
Generally speaking, “IDR” is a catch-all term for a variety of repayment plans. These plans generally reduce your monthly payment amounts to somewhere between 10 to 20% of your discretionary monthly income.
The downside to an IDR plan is that it will take that much longer to pay back your loan. This is why many pair an IDR plan with a loan forgiveness plan, allowing them to make the smallest payment possible for a smaller number of years (such as 10 years for the Public Service Loan Forgiveness program).
Unfortunately, only certain loans qualify for any form of income-driven repayment.
Are Parent PLUS Loans Eligible for Income Based Repayment?
That brings us back to the big question: are Parent PLUS loans eligible for income-driven repayment? The short answer is “no.”
While there are a variety of IDR plans available, Parent PLUS loans cannot be paid back under any of these plans. However, if you and your parents are interested in income-driven repayment, you may qualify for it by consolidating your Parent PLUS loan.
An Option for Parents to Consider
While PLUS loans are not eligible for IDR, you can always consolidate such loans. If you consolidate them into a Federal Direct Consolidation Loan, such loans are now eligible for the ICR income-driven repayment plan.
Under the ICR plan, you either pay 20% of your discretionary income or the amount that you would pay, based on income, via a 12-year fixed payment plan. Using those calculations, you will pay whatever amount is lower.
If you only pay the minimum amount each month, you will be making ICR payments for up to 25 years.
Use an income-contingent repayment calculator to compare the cost of ICR with standard repayment.