Student Loans: Parent Plus Loans Could Get $10K Forgiveness
President Joe Biden announced his administration’s much-anticipated plan for student loan forgiveness on Aug. 24. But now, a group of senators is urging the administration to revise the forgiveness of Parent PLUS loans to match Pell grants, which get the highest relief under the plan.
“The Senators ask the Administration to extend the additional $10,000 in student debt forgiveness to Parent PLUS borrowers whose children were Pell Grant recipients and to ensure improvements to student loan forgiveness programs include Parent PLUS borrowers,” the senators, led by Senator Chris Van Hollen, said in a statement.
Under the plan, up to $10,000 in federal student debt relief may be offered to borrowers earning less than $125,000 (or $250,000 if married). That figure rises to up to $20,000 in student loan cancellation for Pell Grant recipients. Further, the White House announced an extension of the student loan repayment pause “one final time” — to Dec. 31, according to a White House fact sheet. Parent Plus and Grad Plus loans are also eligible.
According to the statement, there are more than 3.6 million Parent PLUS borrowers owing more than $107 billion – a large percentage of which are parents whose children have received Pell Grants
The group of senators emphasized the fact that Parent PLUS loans have less favorable terms than other types of federal student loan programs, including higher interest rates and origination fees.
“High origination fees and high interest rates for Parent PLUS borrowers have forced the lowest income borrowers, Black, Brown, and older borrowers to face difficult tradeoffs in order to keep up with student loan payments, resulting in possible loan default or, in the case for some seniors, offsets in Social Security benefits,” they wrote in a letter to Biden.
“These borrowers demonstrated significant financial need at the time they borrowed the PLUS loan, as evidenced by the fact that their students qualified for Pell Grants based on family income,” they added. “Like student borrowers who received Pell Grants, these borrowers also face numerous barriers to successful repayment and should receive relief.”
Take Our Poll: Do You Think Student Loan Debt Should Be Forgiven?
Sallie Mae explains on its website that Parent Plus loans are federal student loans issued directly to parents.
“The government takes a look at your credit, offers some flexibility in repayment options, and the ability to fill funding gaps after exhausting federal student loans to students, grants, and scholarships. For the 2021-2022 school year, the Parent Plus loan has a 6.28% interest rate plus an origination fee of 4.228%,” according to the website.
Following some confusion after the Aug. 24 announcement, Education Secretary Miguel Cardona tweeted: “I’ve seen your questions about which loans qualify for forgiveness. All @usedgov-held loans are eligible! Share this post and spread the word.”
More From GOBankingRates
- Houses in These Cities Are Suddenly Bargains
- See GOBankingRates' Top 100 Most Influential Money Experts and Vote for Your Favorite
- 3 Things You Must Do When Your Savings Reach $50,000
- 48 Easy Things You Can Do To Live Better and Save Money
