Parent PLUS Loan Borrowers Get New Repayment Options Under Proposed Law

The "Affordable PLUS Repayment Options for Parents Act of 2025" aims to give parents a break on repaying federal PLUS loans taken out for their kids' education. Right now, these loans have fewer flexible repayment options compared to loans students take out themselves. This bill changes that, effective immediately upon enactment, by opening up income-contingent and income-based repayment (IBR) plans to parent borrowers.

Making Repayment Fit Your Wallet

This legislation directly tackles the issue of affordability. It amends the Higher Education Act of 1965 (Section 455(d)(1)(E)) to allow parents with Federal Direct PLUS Loans, or those who consolidated them, to access IBR plans. Previously, these borrowers were locked out of these options. The bill also tweaks the definition of "partial financial hardship." Now, you're considered to have a hardship if your annual payments under a standard 10-year plan are more than 15% of what's left after subtracting 150% of the poverty line income for your family size from your and your spouse's adjusted gross income (SEC. 3). This could mean more parents qualify for reduced payments.

Real-World Impact

Imagine a single parent earning $60,000 a year with one child. The poverty line for a family of two is around $20,000 (this number changes, so check the latest figures). Under this bill, if their annual PLUS loan payments exceed 15% of the difference between their income and 150% of the poverty line, they could qualify for IBR. That means more money in their pocket each month to cover other expenses. This applies to any borrower who, on or after the date this bill is enacted, is either actively repaying or will repay a Federal Direct PLUS Loan for a dependent student, or a Federal Direct Consolidation Loan used to repay that PLUS loan, through an income-contingent or income-based repayment plan (SEC. 4).

The Bottom Line

This bill offers a potential lifeline for parents struggling with student loan debt. By expanding access to income-driven repayment plans, it acknowledges that parents, just like students, can benefit from repayment options tied to their income. While it opens doors to more manageable payments, it's worth noting that extending repayment periods can mean paying more interest over the life of the loan. The bill's immediate effective date means these changes could kick in quickly, offering immediate relief to eligible parent borrowers. The potential increased cost to taxpayers is also a consideration.