Can a Parent PLUS Loan Be Transferred to the Student?

Parent PLUS loans are federal student loans that parents can take out to help pay for their child's education. These loans are in the parent's name and are their responsibility to repay. Many people wonder if it's possible to transfer a Parent PLUS loan to the student once the student graduates or if they take over the loan for some reason.

The short answer is no, Parent PLUS loans cannot be transferred to the student. These loans are specifically designed to be the responsibility of the parent who took them out. Here’s why:

1. Loan Ownership and Responsibility: Parent PLUS loans are federal loans that are issued to parents and not the student. As such, the legal obligation to repay the loan rests with the parent. Transferring the loan to the student would require a complete change in the loan's terms and conditions, which the federal student loan program does not allow.

2. Consolidation or Refinancing: While you cannot transfer a Parent PLUS loan to a student, there are other options. One potential option is for the student to consolidate or refinance the loan after graduation. If the student is creditworthy, they may be able to refinance the loan in their name, but this process does not involve transferring the loan. Instead, it involves taking out a new loan to pay off the existing Parent PLUS loan. This would effectively shift the responsibility of repayment to the student, but it does not change the original loan terms.

3. Repayment Plans: Another option for managing Parent PLUS loans is to explore different repayment plans. The parent can choose from various repayment plans offered by the federal student loan program, including Income-Contingent Repayment (ICR) or Income-Based Repayment (IBR) plans. These plans can make loan payments more manageable based on the parent’s income.

4. Loan Forgiveness Programs: In some cases, parents with Parent PLUS loans may be eligible for loan forgiveness programs. For example, Public Service Loan Forgiveness (PSLF) is a program that forgives the remaining balance of federal student loans after making 120 qualifying payments while working full-time for a qualifying employer. However, this program does not apply if the parent is not working in a qualifying field or employer.

5. Transferring Financial Responsibility: While you cannot transfer the loan itself, some families choose to transfer financial responsibility for the loan payments to the student. This can be done informally through family agreements where the student agrees to help with or fully take over the loan payments. However, this does not change the loan’s legal ownership or repayment responsibility, which remains with the parent.

6. Loan Cancellation in Case of Death or Disability: In extreme cases, such as the death or permanent disability of the borrower, Parent PLUS loans may be cancelled. If the parent who took out the loan dies or becomes permanently disabled, the loan may be discharged, which means it will no longer need to be repaid. However, this cancellation is not a transfer of responsibility to the student but rather an end to the repayment obligation.

7. Communication with Loan Servicer: If there are issues or concerns with managing Parent PLUS loans, it is always a good idea to communicate with the loan servicer. The loan servicer can provide guidance on available options and help with understanding the terms of the loan and repayment options.

In summary, while you cannot transfer a Parent PLUS loan to the student, there are alternative strategies for managing the loan. These include refinancing, exploring different repayment plans, and considering loan forgiveness programs. It’s essential to carefully consider these options and consult with a financial advisor or loan servicer to find the best solution for your situation.