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Parent PLUS Deep Dive
Stanley Tate
October 06, 2023
Hey ,
It’s finally here: our first ever deep dive 🤿
And this one’s for you, Parent PLUS borrowers.
Since your new loan bills landed in your mailbox, many of you were left wondering, “how the hell am I going to survive?”
It’s a scary position to be in. But I promise you—there are ways out of this.
By the end of this email, you’ll know how to make your Parent PLUS loans more manageable, free up money for retirement, and live the life you worked so damn hard for.
Let’s get into it.
🙅 Don’t want more deep dives?
Every other week, we deep dive into a highly requested topic—which you can vote for at the end. If you only want Wednesday’s newsletter, opt out now.
In this deep dive, we’ll cover:
🪢 The double consolidation loophole
How it works
How to do it: step by step
Eligibility and risks
📉 Other ways to lower your monthly bill
🙋🏻♀️ Your Parent PLUS questions answered
📚 Parent PLUS resources
…and why you shouldn’t pay your next loan bill if you can’t
🪢 Introducing: The double consolidation loophole
If you’ve got a Parent PLUS loan and want to reduce your monthly bill, the only plan you should be eligible for is the Income-Contingent Repayment plan. And this takes a 20% bite out of your paycheck. Ouch.
But what if you could fill in some paperwork and unlock access to more affordable repayment plans like SAVE?
Well, there’s a way.
And that’s through the double consolidation loophole.
Your servicer won’t tell you about this. But it is totally legal. The Department of Education acknowledged it, and news outlets like NPR have even recommended it.
The catch?
It’s getting shut down in 2025. And the consolidation process could take up to 6 months. Plus, if you want to get retroactive credit towards forgiveness through the IDR Waiver, you’ll need to consolidate before the end of this year. Check out this video for more context.
Who’s eligible for double consolidation?
Anyone with at least two federal loans. It doesn’t matter if they’re Parent PLUS, FFEL or Direct loans.
You can always add other loans into the mix, but the two federal loans are necessary.
Risks
If you consolidate your loans then it turns out you don’t qualify for SAVE, the worst case scenario is you end up where you were at the start. That’s basically it.
When you consolidate, any interest on your loans transfers to your principle balance. And then it starts earning interest of its own. So if your loans carry tons of interest, this is something to be aware of.
Double consolidation: step-by-step
Double consolidation takes about 12-16 weeks. Here’s how it goes:
Fill out this paper application to turn your Parent PLUS loans into direct consolidation plus loans.
Make sure you split your loans into two groups, and submit them to two different servicers. Don’t send them to your current provider or to a non-federal provider. If you do, you won’t be able to complete the process. Learn more.
Once they receive and process your application, you should then have two separate direct consolidation plus loans.
Enter the “double” part. Now, you fill in the same paper application to turn the two direct consolidation plus loans into one loan.
At this point, the “plus” part disappears, and opens up a load of repayment options that weren’t available to you before. Including SAVE.
These steps might differ slightly depending on whether you’re consolidating Parent PLUS loans only, or a whole bunch of federal loans. Mass.gov created these detailed step-by-steps for both scenarios.
It’s a tricky process, so I’d always recommend working with someone who knows what they’re doing. You can talk to me, or find another attorney to help.
⏸️ Let’s take a quick breather
I love getting to know you all. The messages you send me every week fill my life with so much joy and purpose.
But—as you like to remind me—I don’t share much of myself here. And I want to change that. So here’s a little life update from the guy behind the newsletter.
📺 What I’m watching: Love is Blind. I can’t stand Uche.
🥃What I’m drinking: William Heavenhill 9th Edition 15 YO Small Batch Kentucky Straight Bourbon Whiskey
📖What I’m reading: Who Not How by Dan Sullivan
🍝What I’m cooking: This spaghetti. OMG.
And back by popular demand, an update on my boy Gio. This one’s for you, Monique!
Alright, let’s get back to it.
👀Not eligible for SAVE?
Let’s say you’ve done everything you can to get yourself on SAVE. But it didn’t work, now you’re stuck on an ICR or another expensive repayment plan. And your bills are more than you can manage.
Here are your options:
Exhaust your forbearance time
Look at what your payment could be under the 20-30-year plans:
If none of these work for you, you can make one payment in full every 90 days. This means you’ll always be 60 days delinquent but never past due—so your credit will be safe.
You can borrow more college loans to qualify for an in-school deferment.
🪄One final trick: try lowering your discretionary income
If you have some freedom in your budget, lowering your discretionary income could reduce your loan payments significantly.
Here are 3 ways to do it:
Switch to a ‘Married Filing Separately’ tax status
If your spouse works, switch to MFS. This way, they’ll only look at your income.
Pay more towards your retirement plan contributions
This only works if your employer has an eligible retirement vehicle like a 401k. Or if you’re self-employed and your business takes losses.
Contribute more to your HSA
Need help doing any of this?
⏰Why you shouldn’t pay your next loan bill
If your monthly bill is too high, you don’t have to pay it by the due date. Use the 12-month on-ramp period while you figure out a more permanent strategy. And promise me you’ll do this with ZERO shame. It’s there for you to use. Use it.
🎤Your questions asked
“I consolidated already, now my payments are sky high. What can I do?”
You can take out another small federal loan. Now, let me explain how this works. To do the double consolidation, you need at least two federal student loans. Because you’ve already consolidated, you have no more federal student loans to combine it with.
The solution? Borrow another federal student loan. Now here’s the catch: there are two deadlines to look out for. The first is the double consolidation loophole closing in July 2025. The more urgent deadline is the Income-Driven Repayment Waiver which gives you retroactive credit towards forgiveness. To get this retroactive credit, you need to have these consolidations done by the end of 2023.
“Who do I send my consolidation forms to?”
Whichever lender you like. If you’re doing a paper application, you can send them to Nelnet, Aidvantage, Mohela and Edfinancial. You just send them to the corresponding address. Something to be aware of: Mohela and Edfinancial use Aidvantage as a consolidating servicer. So in your application you’d say “Send to Aidvantage, attention: Mohela / Edfinancial”. If you do it online, you just check a box and that’s that.
“Should I refinance my Parent PLUS loan or leave it as a federal loan?”
This is a terrible idea for most people. If you turn a loan from federal to private, you’re going to lose these flexible repayment options federal loans offer. Plus, private lenders don’t let you escape monthly payments. There’s no on-ramp, no leeway, no nothing. Sure, you may save on the interest that grows on the loan but you’re going to have to make those payments.
If you’ve got Parent PLUS loans, you’re often going to be closer to retirement than to the beginning of your career. And at that stage, you might want to prioritize saving for retirement over paying off loans. You’re going to want the most flexible repayment options that only federal loans offer.
Who does refinancing make sense for? People whose income is high and their student loan balance is low. So if you earn $100k, owe $25k in student loans, and you’ve got a few years before retirement, refinancing makes sense.
“Should you withdraw your retirement funds early to pay Parent PLUS loans?”
Short answer — no! It’s rarely a good idea to withdraw your retirement savings early — especially to pay off a debt that can be effectively managed with the right student loan repayment program. Before you borrow from your 401k or sell stocks, use the Federal Student Aid’s Loan Simulator to estimate your payments under the different repayment plans.
The only time I’d recommend doing this is if you can quickly earn back that retirement money, or if the debt is a huge emotional weight you need to get rid of.
“Can I apply for the disability forgiveness for Parent PLUS loans?”
Yes, absolutely. But to be clear, you can only apply if you yourself become permanently disabled—not if your child becomes disabled.
“I’ve consolidated but the Parent PLUS tag is still showing. How do I fix this to qualify for SAVE?”
You just submit the paper application. You’re not trapped, you haven’t been caught red handed. This is a legal loophole that’s been publicly acknowledged by the Education Department, and recommended by the Office of Attorney General for Massachusetts, NPR, and other sources. You’re fine. Just submit the paperwork and live your life.
📚 Resources
📈 Want to see your product or service here?
What did you think of our first deep dive, ?
And that’s a wrap!
Thanks for making it til the end, . I know that was a lot to take in.
Check out the blogs and videos I shared, and weigh up your options. And if you ever want my help, I’m right here.
Take care,
Tate