If you are a parent with Federal Direct Parent PLUS loans, you should be aware of an upcoming deadline. The program called the Double Consolidation for Parent PLUS loans, can reduce your monthly payments by over 50%. It expires on 7/1/2025.
This Deadline may seem far away, but the double consolidation process takes 5 – 7 months to complete. Due to the processing time required to complete this properly, it is unclear if we will take on any new clients after December 1.
Unlike other federal programs, this program does not have a registration. It is a series of steps that the borrower must take to achieve a specific loan consolidation structure. Based on our information, these steps must be fully completed by the 7/1 Deadline, or the borrower will not receive the benefit.
Need for Proper Planning with 7/1/25 Deadline.
To maximize this program, borrowers must plan for the Double Consolidation and its steps. We outline these steps in our article “Parent PLUS Double Consolidation Loophole: A Comprehensive Guide.”
Due to the current problems in the consolidation process, the latest date to start is in mid-November. The biggest issue is that borrowers are at the mercy of student loan servicers and the Department of Education (DOE). The process involves a series of loan consolidations, both paper and electronic. It also includes proper tax filing advice and repayment selection. The DOE and loan services require manual changes for this process, another planning problem that can add time.
Advantages of Double Consolidation
The most significant advantage of the Parent PLUS Double Consolidation is that it can reduce the payment by over 50%. Parent PLUS loans are limited to only one Income-Driven Repayment (IDR) method called Income-Contingent Repayment (ICR). This method uses a 20% discretionary income factor. By completing the Double Consolidation, borrowers are able to enroll in the other IDR methods that use a 10% discretionary income factor.
Here is an example of the Double Consolidation outcome. It assumes the borrower can complete the series of steps correctly. This example assumes the borrower has $125,000 of Parent PLUS debt and an adjusted gross income of $80,000. If the borrower is married, they must file married and separate to maximize the lower payment.
Completing the double consolidation and filing married and separately resulted in savings of $604 per month or $7,248 per year. With the right tax planning, this strategy could deliver $1,557 monthly savings or $18,684 annually
If you have the proper employment, Parent PLUS loans can be forgiven using the Public Service Loan Forgiveness (PSLF) rules.
Parent PLUS Loan Double Consolidation and Retirement Plan
More Parent PLUS borrowers are carrying their children’s student loans into retirement via Parent PLUS loans. Even though this may be years away, using this strategy could be a game changer since the repayment amount is based on the borrower’s AGI. If the borrower’s income decreases, the payment would also be reduced.
Parents need to realize that Parent PLUS loans are legally their loans even though they were for their children’s education. If the borrower defaults, the parent is responsible. The government can garnish social security, tax refunds, and other items if default occurs.
Double Consolidation Risk
The problem with completing this process is the required steps and the lack of a formal enrollment process. Due to the changes at the DOE, the borrower needs to manage the series of steps by themselves. The DOE has closed this loophole with their system updates but is allowing it through 7/1/2025.
The system upgrades do not allow the process to be completed electronically. After the final consolidation is done, the borrower must contact the loan servicer and explain they are pursuing a double consolidation. The DOE then must manually override the system to get favorable repayment options.
Based on our information, these overrides will stop on 7/1/2025, and that is why we believe borrowers should have their final consolidation and repayment method processed by mid-May to avoid any issues. Another factor in this process is the electronic consolidation, which can only be done once every six months. To get this done on time, a combination of paper and electronic consolidations are required.
Parents of Recent Graduates or May 2025 Graduates Need to Consider
As this program is for any parent with Parent PLUS loans, recent parents of graduates and upcoming 2025 graduates can still consider this option. Some advanced planning will be required, but it is possible. For example, parents of recent graduates can forfeit some of their grace period to start the process earlier.
As you saw above, the savings are significant.
Summary of Parent PLUS Loans Double Consolidation is Expiring
The savings that can be generated are significant but require the borrower to take ownership. This strategy may be complicated since considerable changes have occurred at the DOE and the loan servicers. PayForED has a list of advisors trained in this procedure and process.
Do not look at the deadline date and think there is plenty of time. Due to the SAVE halt, the current electronic consolidation and IDR method selection process is changing. These delays may make the processing time longer than the typical 5 – 7 months.
