Can I Consolidate My Parent Plus Loan With My Loans?

Question:

Dear Steve,

I have student loans in my name and parent plus loans I took out for my daughters.

I read on several sites that parent plus loans taken out for a dependent’s education can be consolidated with the parent’s own student loans. Does that make the consolidated loan eligible for the REPAYE student repayment program?

Edward

Answer:

Dear Edward,

Now that’s an interesting question. While you can technically consolidate them all together, the Parent Plus loan contaminates the new consolidated loan.

You’d have to pay off the new loan at the higher repayment that would be equivalent to the Income Contingent Repayment (ICR) plan. The Department of Education says, “The Income-Contingent Repayment (ICR) plan is a repayment plan with monthly payments that are the lesser of (1) what you would pay on a repayment plan with a fixed monthly payment over 12 years, adjusted based on your income or (2) 20% of your discretionary income divided by 12.

This plan is the only available income-driven repayment option for parent PLUS loan borrowers. Although PLUS loans made to parents can’t be repaid under any of the income-driven repayment plans (including the ICR Plan), parent borrowers may consolidate their Direct PLUS Loans or Federal PLUS Loans into a Direct Consolidation Loan and then repay the new consolidation loan under the ICR Plan (though not under any other income-driven plan).”

You’d be far better off by consolidating them into two separate new Direct Loans and only put the Parent Plus loan in one of them.

Sincerly,
Steve

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