About 89% of parents over 50 who take out Parent PLUS Loans are still paying them off well into their 60s. In contrast, only about 33% of younger borrowers still have loans by then—they tend to pay them off faster.
Last winter, our neighbor Tom, who’s almost 65, was stressing over how to pay for his son’s final year of college without dipping into his retirement savings. His funds were already stretched, and scholarships didn’t cover everything. That’s when he started looking into Parent PLUS Loans—a federal option that seemed helpful but also made him nervous.
Tom’s not the only one. Many older parents face this tough choice: wanting to support their kids’ education but unsure about taking on debt later in life.
In this article, I will unpack what Parent PLUS Loans are and how they play out for aging borrowers, and will point out their pros and cons. We’ll cover what makes these loans tick, their perks and pitfalls, and some tips to navigate the decision. Moreover, we will also talk about eligibility criteria, interest rates, and Parent PLUS Loan forgiveness, so you can figure out what’s best for your family’s future.
Read More: Citizens Student Loans 2025 Update: New Features and Flexibility for Modern Students
What is a Parent PLUS Loan?
A Parent PLUS Loan is a federal student loan for parents of dependent undergrads, meant to help cover college costs like tuition, housing, and books. Unlike student loans, the parent is the only one responsible for paying it back. Offered by the U.S. Department of Education, these loans are a go-to when scholarships, grants, and other aid don’t cover everything.
How It Works
With a Parent PLUS Loan, you can borrow up to the full cost of your kid’s college, minus any other financial aid they get. The money goes straight to the school, and any extra amount is either sent to you or your child. You usually start paying it back within 60 days of the loan being disbursed, but you can ask to hold off while your kid’s in school at least half-time and for six months after they graduate.
Parent PLUS Loan Eligibility
To get one, you need to be the biological, adoptive, or stepparent of a dependent undergrad enrolled at least half-time at an approved school. There’s a credit check, but don’t worry—it’s not about having a high credit score. They’re mainly looking to make sure you don’t have things like recent bankruptcies or defaults. If your credit isn’t perfect, you can still apply with an endorser (think of it like a co-signer) or explain special circumstances. You also have to be a U.S. citizen or eligible non-citizen and file the FAFSA to start the process.
The Pros of Parent PLUS Loans for Aging Borrowers
Parent PLUS Loans have some real benefits, especially for parents who want to help their kids through college without turning to expensive private loans. For older borrowers, these benefits can peace of mind. This section discusses the key advantages, tailored to the needs of parents over 50.
Covers All College Costs
One big benefit is that you can borrow whatever it takes to cover your kid’s college bill, up to the school’s total cost of attendance. Unlike other federal loans with hard limits, Parent PLUS Loans step in where scholarships, grants, and student loans leave off. For Tom, this meant he could pay for his son’s final year at a public university without touching his retirement savings.
Flexible Ways to Pay Back
These loans come with a few repayment plans that firs your income. The standard plan lasts 10 years with fixed monthly payments, but you can pick a graduated plan (starting low and increasing over time) or an extended plan (up to 25 years) for smaller monthly installments.
If you combine your loans into a Direct Consolidation Loan, you can try Income-Contingent Repayment (ICR). This plan sets payments based on 20% of your discretionary income and forgives the rest after 25 years. For older borrowers living off pensions, these options can make payments feel more manageable.
Options to Pause Payments
You can hit pause through deferment while your kid’s in school and for six months after they graduate, though interest keeps piling up. If things don’t go as planned, like a job loss, forbearance lets you stop payments for a bit. These safety nets are a big deal for aging borrowers who might hit rough patches as retirement looms.
Chances for Parent PLUS Loan Forgiveness
Parent PLUS Loan forgiveness can be a game-changer. If you work in public service, like teaching or government jobs, you might qualify for Public Service Loan Forgiveness (PSLF) after 120 payments, but you’ll need to consolidate and switch to ICR. Teachers at low-income schools could get up to $17,500 forgiven after five years. Even without those, ICR offers forgiveness after 25 years, though you might owe taxes on the forgiven chunk. For older borrowers still in the workforce, these paths can lighten the load.
Steady Parent PLUS Loan Interest Rate
The Parent PLUS Loan has a fixed interest rate, so it stays the same over time and won’t suddenly go up. For loans disbursed from July 1, 2024, to June 30, 2025, it’s 9.08%, higher than other federal loans but often better than private ones for folks with less-than-perfect credit. A fixed rate means no surprises, which is a relief for older borrowers mapping out retirement budgets.
The Cons of Parent PLUS Loans for Aging Borrowers
The perks are nice, but Parent PLUS Loans have some serious downsides, especially for aging borrowers with less time to pay or tighter budgets in retirement. This section digs into the risks to help you see the full picture.
High Interest and Fees
That 9.08% interest rate for 2024-25 is the steepest among federal student loans, compared to 6.53% for undergrad loans. On top of that, there’s a 4.228% origination fee taken out of each disbursement. Borrow $50,000, and you’re already down over $2,100 before interest even kicks in. For older borrowers, these costs can snowball, especially if you pause payments and let interest build.
Easy to Borrow Too Much
Since you can borrow up to the full cost of attendance, it’s tempting to go overboard. Tom almost took out extra for his son’s dorm upgrades, but a quick math check showed it would stretch his payments for years. For aging borrowers, big loans can choke budgets, especially when 45% of those over 50 have less than $50,000 saved for retirement, per a 2023 AARP report.
Not Many Income-Based Options
Unlike other federal loans, Parent PLUS Loans don’t get the sweeter income-driven plans like SAVE, which cap payments at 10% of discretionary income. Your only shot is ICR, which takes 20% of discretionary income and requires consolidation. For older borrowers on fixed incomes, that’s still a lot, and the 25-year forgiveness timeline might not help if you’re already in your 60s.
Hurts Retirement Plans
Carrying student debt into retirement is no picnic. The average Parent PLUS borrower over 50 owes $30,000, and with interest, it can take ages to clear. If you’re choosing loan payments over boosting your 401(k) or building an emergency fund, you’re shortchanging your future. Defaulting’s even worse—your Social Security or tax refunds could get snatched, a real worry for 15% of older borrowers in default, according to the Consumer Financial Protection Bureau.
Credit Checks and Full Responsibility
The credit check for Parent PLUS Loan eligibility can trip you up if you’ve had recent financial hiccups, like foreclosures or defaults. Even if you get approved, the loan’s all on you—your kid can’t take it over, and there’s no out if they can’t work. For aging borrowers, this long-term promise can feel like a risky bet, especially if your health or income takes a hit.
Practical Tips for Aging Borrowers
Tackling Parent PLUS Loans as an older borrower takes some smart planning. This section shares hands-on advice to keep risks low and make the most of the benefits, especially for parents over 50.
Borrow Just Enough
Figure out exactly what your kid needs and don’t borrow a penny more. Use a loan calculator to see what monthly payments and total interest will look like. If you can, mix in savings, your kid’s part-time job, or a couple of years at community college to keep borrowing low.
Check Other Options First
Before grabbing a Parent PLUS Loan, use up every other resource. Push your kid to apply for scholarships, grants, or work-study. Private student loans might have lower rates if your credit’s stellar, but they lack federal perks. A 529 plan or a school payment plan can also cut down on loans.
Get Ready for Repayment
If you’re still working, the standard 10-year plan might clear the loan faster and save on interest. If money’s tight, look at ICR or extended repayment, but keep an eye on the total cost. Set up auto-payments for a 0.25% rate cut. If PSLF is in play, track your payments like a hawk and certify your job yearly.
Guard Your Retirement
Don’t let loan payments eat your retirement savings. If you’re over 50, max out catch-up contributions to your 401(k) or IRA. If you’re in a bind, chat with a financial advisor to juggle loans and long-term goals. Refinancing to a private loan might trim your rate, but you’ll lose federal safety nets like PSLF, so think it through.
Know Your Forgiveness Paths
If you’re in public service, chase PSLF by consolidating and joining ICR. For ICR’s 25-year forgiveness, brace for taxes on the forgiven amount. If you can’t work due to disability, look into loan discharge, though it doesn’t apply if your kid’s the one with the disability.
Conclusion: Finding Your Balance with Parent PLUS Loans
Parent PLUS Loans can be a saving grace for aging borrowers like Tom, helping cover college costs with flexible repayment and possible forgiveness. But the high Parent PLUS Loan interest rate, risk of borrowing too much, and strain on retirement plans are real hurdles, especially for those over 50. By borrowing smart, exploring other options, and planning repayment with care, you can keep your financial future on track while supporting your kid’s dreams.
FAQs
What is a Parent PLUS Loan?
It’s this federal loan that’s like a helping hand for parents of undergrads who are still dependents. You can borrow enough to cover all college costs—tuition, dorms, books, you name it. The catch? It’s all on you, the parent, to pay it back. Your kid’s off the hook, which is great for them but means you’re the one signing up for the long haul.
Can aging parents get Parent PLUS Loan forgiveness?
You sure can, but it takes some legwork. If you’re working in a public service gig—like teaching at a public school or a government job—you might qualify for Public Service Loan Forgiveness after making 120 payments. You’ll need to consolidate your loan into a Direct Consolidation Loan and switch to Income-Contingent Repayment first. Another option is sticking with ICR for 25 years, which forgives what’s left, though you might owe taxes on that amount. Teachers in low-income schools could also snag up to $17,500 after five years. It’s not a free ride, but it’s a light at the end of the tunnel if you’re still in the workforce.
What’s the Parent PLUS Loan interest rate?
For loans starting between July 1, 2024, and June 30, 2025, you’re looking at a fixed 9.08%. Plus, there’s a 4.228% fee taken out of each chunk of money you borrow. The rate gets set every year, and it’s the same for everyone, whether your credit’s golden or not. It’s higher than what students pay for their loans, so it’s worth thinking hard about how that adds up over time.
Can I hand off a Parent PLUS Loan to my kid?
Nope, this one’s yours to keep. The loan’s in your name, and there’s no way to pass it to your child, even if they’re ready to step up and help. It’s a bummer, especially if you were hoping they’d take over once they’re settled, but that’s the deal with these loans. You might need to have a heart-to-heart about how they can pitch in without officially owning the debt.
What happens if I can’t pay my Parent PLUS Loan when I’m retired?
If you’re struggling, don’t panic—there are ways to ease the pressure. You can ask for forbearance to pause payments for a bit, like if you’re in a rough spot financially. Or you could switch to Income-Contingent Repayment to make payments more doable based on what you’re earning. But if you let it slide into default, things get hairy—they could start taking chunks of your Social Security or tax refunds. My advice? Call your loan servicer the second you smell trouble to work out a plan.
What if my credit’s not so hot?
You’ll need to pass a credit check to get a Parent PLUS Loan, but it’s not about having a perfect score. They’re looking for big red flags, like recent bankruptcies or defaults. If your credit’s had some bumps, you can still get the loan by bringing in an endorser—kinda like a co-signer who’s got your back—or by explaining why those credit issues happened, like a medical emergency. It’s not a dealbreaker, but it’s something to prep for.
Is the 25-year forgiveness worth chasing?
It’s a tough call. With ICR, you can get forgiveness after 25 years, but whatever’s forgiven might count as taxable income, so you could owe the IRS a chunk. If you’re in your 60s, you might not make it to that 25-year mark, which means you’re stuck paying anyway. For someone like Tom, who’s nearing retirement, shorter-term fixes like lower payments or public service forgiveness might make more sense. Run the numbers to see what fits your life.
Can I put off payments while my kid’s still in school?
Yup, you can defer payments while your kid’s enrolled at least half-time and for six months after they graduate. It’s a nice breather, but heads-up: interest keeps piling up the whole time, so your loan will grow bigger. If you can swing even small payments during deferment, it’ll save you money down the road.
What if my kid drops out or doesn’t graduate?
You’re still responsible for the loan, no matter what. Since it’s in your name, your kid’s college journey doesn’t change your duty to pay. If they drop below half-time enrollment, deferment stops, and you’ll need to start paying. Reach out to your loan servicer quick to figure out options, like switching to a repayment plan that’s easier on your budget.
