A bill has been introduced in the House of Representatives that would allow students to take over debts that were incurred on their behalf under the Parents PLUS loan program.
A copy of H.R.7982, the Parent PLUS Loan Fairness and Responsibility Act, can be accessed by clicking here.
Under the Parent PLUS program, parents take out loans to pay for their child’s cost of attending college or university. The student is not responsible for paying back this type of loan. But if this bill is enacted, students would be eligible to take over the debt and repay it on behalf of their parents. The major upshot of taking this step would be that the loans would then be eligible for forgiveness under plans like the Public Service Loan Forgiveness program, and other income-driven repayment plans. Students must be out of school for at least six months before they can apply to take over the loan on their parents’ behalf.
“As college costs and economic burdens continue to rise, federal law should allow families to determine financial liability for PLUS loans in a way that accommodates their financial situation,” said Rep. Bill Foster [D-Ill.], the sponsor of the proposed legislation. “This legislation would provide a common-sense solution by allowing a child, if they’re willing, to take financial responsibility for the loans that allowed them to go to college.”
When evaluating whether a child is eligible to take over a PLUS loan, the lender will assess the child’s employment status, income level, and credit history, the debt-to-income ratio before and after the transfer, and the total amount of the transfer.