Is My PLUS Loan Eligible for the SAVE Repayment Plan?

You may have heard over the last few months about the new SAVE Repayment Plan. It's applicable for certain federal loans, and it calculates a borrower's monthly payment based on income, with some borrowers owing $0 on a monthly basis. It also cancels the remaining loan balance after 20 or 25 years of repayment. But PLUS Loan borrowers, many of them parents of undergraduate students, don't initially qualify. However, there are steps a PLUS borrower can take to become eligible.

For a limited time, PLUS Loan borrowers can go through a process called "double consolidation" to transform their loans into ones eligible for the SAVE Repayment Plan. But there are some restrictions. Here's how it works:

• First, borrowers must have at least two federal loans. Those can be two or more PLUS Loans, or a PLUS Loan and at least one other federal loan, perhaps one borrowed for their own education.
• Borrowers with two PLUS Loans should consolidate each one separately with a different loan servicer into its own Direct Consolidation Loan. Then, they need to consolidate those two Direct Consolidation Loans together into one.
• Borrowers with a PLUS Loan and another federal loan should first consolidate all of their PLUS Loans (even if they only have one) into one Direct Consolidation Loan. Then, they need to consolidate their new Direct Consolidation Loan and their other federal loan(s) together into one new Direct Consolidation Loan.
• Once borrowers have one Direct Consolidation Loan, they can apply for the SAVE Repayment Plan.

Here are some key details to keep in mind with this process:

• These steps must be followed in order to make sure the new loan becomes eligible for SAVE.
• The end resulting Direct Consolidation Loan may have a minimally higher interest rate because of how the average interest rate is calculated when consolidating.
• All consolidations must be completed by July 1, 2025. After this date, the Department of Education will eliminate this "double consolidation" option from eligibility.

The Massachusetts Office of the Attorney General has provided detailed instructions for this process on its website, including the steps for completing the appropriate paperwork. Consult this guidance before you begin the process. And if you have questions about your specific situation, or about the SAVE Repayment Plan in general, contact your loan servicer.