A New Parent PLUS Loan After Double Consolidation? Best Strategies to Complete the Loophole Again Before July 2025

As a Parent PLUS loan borrower who successfully completed the double-consolidation loophole you’ve unlocked more affordable repayment plan options like IBR, PAYE, or SAVE. If you have kids who are still in college, you might need new Parent PLUS Loans in the future but might not have access to the highly advantageous double-consolidation strategy. 

The impending “Parent PLUS cliff” in July 2025 prevents parents from taking advantage of double consolidation. Fortunately, you can still consolidate new Parent PLUS Loans you’ve taken out since completing your initial double consolidation. And you should continue to employ this strategy while you still can — but with caution.

Keeping your eye on the Parent PLUS cliff is critical

Your previously double-consolidated Parent PLUS Loans might be enrolled in an income driven plan, but any new Parent PLUS Loans you borrow aren’t eligible unless they also go through the double-consolidation process.

Remember that your unconsolidated Parent PLUS Loans are only eligible for fixed repayment options. These include the 10-year Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan, and Graduated Extended Repayment Plan. Under each of these plans, you’ll pay off your loan balance over a set term, typically 10 or 25 years.

If you hold new Parent PLUS Loans that haven’t been consolidated, they’re only eligible for fixed repayment plans. Furthermore, they’re accruing interest while the loans are under “in school deferment” status.

When you consolidate Parent PLUS Loans, they become eligible for one income-driven repayment (IDR) option: income-contingent repayment (ICR). This student loan repayment plan lets you qualify for student loan forgiveness after 25 years of payments through the plan. However, its monthly payment is based on 20% of your net discretionary income. This is the least generous IDR plan and often doesn’t offer borrowers relief with lower payments.

If your new Parent PLUS Loans go through a total of two consolidations, then they’re eligible for the more generous IDR plan options like IBR and SAVE — just like the loans you’ve already consolidated. However, time is of the essence! 

You must complete this process before July 2025 for your new Parent PLUS Loans to receive the same treatment.

After July 2025, any Parent PLUS Loans that haven’t undergone the double consolidation process will be stuck on a fixed repayment plan or ICR.

Given the complexity and time-sensitive nature of executing these strategies properly, we highly recommend booking a student loan consultation if you’ve never worked with us, or a follow-up student loan consultation if you’ve worked with us previously. 

Don’t compromise your original double consolidation. It’s critically important that these strategies are employed perfectly.

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Parents’ how-to guide: You’ve completed a double consolidation, but have new Parent PLUS Loans — now what?

Let’s say you’ve since borrowed new Parent PLUS Loans after completing your initial double consolidation. Furthermore, you don’t plan on borrowing additional Parent PLUS Loans in the future.  

If you took out Parent PLUS Loans in Fall 2023 and/or Spring 2024 and these loans have already been posted to your account, it’s time to initiate the double-consolidation process again. If your student is still in school, the loans are likely in “in school deferment” status. You aren’t required to repay these loans yet, but once the loans are posted to your account, you can consolidate them — even if your child’s still in school. 

Here are a few other scenarios that can play out if you’ve gotten new Parent PLUS Loans, but don’t need more in the future.

Scenario A: You have ONE new Parent PLUS Loan

In this scenario, you’ve borrowed only one new Parent PLUS loan after double-consolidating your older loans. You WON’T borrow additional Parent PLUS Loans moving forward..

1. Fill out and submit a paper Direct Consolidation Loan application for your solo Parent Plus Loan

Thankfully, a solo Parent PLUS Loan can be consolidated on its own. It’s critical that you leave out your existing Direct Consolidation Loan that has already been through the double-consolidation process. 

In the “Loans I want to consolidate” section of the paper consolidation application, put the solo Parent PLUS loan. The loan code should be “U” and you’ll include the account number which is approximately 21 digits. This number can be found using the online application (don’t submit it online) or on your NSLDS file. 

You must put your existing Direct Consolidated Loan in the list of “Loans I do not want to consolidate” on the paper consolidation application. 

Complete the Payment Plan Request Form and select “Standard” repayment to process this consolidation. Send this application to a different loan servicer than the one you’re already with.

2. Use the online Direct Consolidation application to combine both of your consolidated loans

Once the new Direct Consolidated Loan containing the solo Parent PLUS Loan is settled, use the online application to consolidate the two Direct Consolidation Loans together.

If you’ve already used the online application within the past six months, use the paper consolidation application and paper Payment Plan Request Form. Select “Standard” for ALL loans. 

You’ll have the opportunity to enroll in an IDR plan of your choice after your final consolidation loan is processed. Select the servicer that’s currently holding your Direct Consolidated Loan containing your original double-consolidation loan.

3. Fill out an IDR application

Once your Double-Consolidation Loan is settled, use this IDR application to apply for the IDR plan of your choice. 

Provide a copy of your income documentation, like your most recent tax return, W-2 or paystub. Mail your completed IDR application and your income documentation to your servicer, or upload them to your servicer’s online portal.

If this doesn’t work, apply directly through your servicer’s website. If your final servicer is MOHELA, search “repayment plan evaluator” on its website. Use their tool, choose your IDR plan and hit apply.

Scenario B: You have TWO OR MORE new Parent PLUS Loans

If you have two or more new Parent PLUS Loans after double-consolidating, but WON’T borrow more Parent PLUS loans, here’s what to do.

1. Double-consolidate your new Parent PLUS loans

Follow the double-consolidation loophole steps outlined here only for your new Parent PLUS Loans. Exclude your existing Direct Consolidated Loan.

Since your existing Direct Consolidated Loan is already enrolled in your IDR plan of choice like IBR, PAYE, or SAVE, consider leaving it alone. This lets you continue making student loan payments while accruing IDR or PSLF forgiveness credit.

When completing the final consolidation in the double-consolidation process for your new Parent PLUS Loans, choose a servicer that you haven't used in this round of consolidations. For example, if consolidation #1 went to EdFinancial and consolidation #2 went to Nelnet, consider choosing Aidvantage for this final consolidation.

2. Consolidate both Direct Consolidation Loans together

Once you’ve completed the double-consolidation process for your new Parent PLUS loans only, consolidate both Direct Consolidation Loans together.

Combining your Direct Consolidation Loans applies the weighted average time in repayment to your whole loan portfolio. This puts all your loans on the same timeline for long-term IDR forgiveness or PSLF. 

Since payments on an IDR plan are based on AGI and family size, not on total loan balance, having all of your loans forgiven at the same time is beneficial. Consolidating and applying a weighted average timeline to forgiveness is more advantageous for most borrowers.

Consolidate your two Direct Consolidation Loans together using the online consolidation application if you haven't used it within the past six months. Use the servicer holding your older Direct Consolidation Loan, not the servicer for your newly consolidated Parent PLUS Loans.

3. Apply for an IDR plan

Once your Direct Consolidation loan is settled, use this IDR application to choose your income-driven repayment plan. Provide a copy of your income documentation, like your most recent tax return, W-2 or paystub, with your IDR application. 

What if you need additional Parent PLUS Loans in the future?

The following scenarios are specifically for parents who’ve done a double-consolidation in the past, have since taken out new Parent PLUS Loans, and need to borrow more later.

Scenario C: You have new, unconsolidated Parent PLUS Loans, and will borrow more Parent PLUS loans in Fall 2024

If, after borrowing new Parent PLUS Loans since completing your initial double consolidation, you expect you’ll need to borrow additional loans, you have some flexibility. 

The critical piece is initiating a consolidation for your unconsolidated Parent PLUS Loans no later than Fall 2024.

We can guide you through this complex process — book a student loan consultation to ensure your Parent PLUS Loan strategy is optimized for your needs. 

We also offer consultations with Parent PLUS loan specialists who assist you in filling out the application paperwork properly. This one-hour consultation is available for returning clients. We’ll fill out the paperwork together on the phone, ensuring accuracy and provide you with step-by-step guidance through the double-consolidation process.

If you’re confident in your abilities to execute this strategy solo, you have a few options:

1. Complete the process for scenario A or B above now, and then repeat the process again for your Fall 2024 loans. This process is more complicated since you’ll fill out and track more applications overall, but can loop these loans into your existing Direct Consolidation Loan faster. This lets you accrue repayment credit on these loans sooner and accelerate forgiveness eligibility.
2.  Keep your new loans in “in school deferment” until your Fall 2024 Parent PLUS loan(s) disburse, and then complete the steps for Scenario B. This process is simpler, but could lengthen your repayment timeline slightly. Your payment count on these loans won’t begin until the consolidations are complete. Interest also continues to accrue while your loans are under “in school deferment” status. Loans enrolled in the new SAVE Plan have an unpaid interest subsidy while in repayment status.
3. Consolidate your new Parent PLUS Loans in Spring 2024; DON’T consolidate it with your original double-consolidated Direct Consolidation Loan. Instead, use the “request to add loans” application. It adds your Fall 2024 Parent PLUS Loans to your new Direct Consolidation Loan from the Spring. Then, consolidate all of the loans together.

Scenario D: You’ve done a double-consolidation on all your existing Parent PLUS loans, and will borrow more loans in Fall 2024 ONLY.

1. Fill out an application to consolidate Fall 2024 Parent PLUS Loan(s) together

Parent PLUS loans can be consolidated on their own, so not to worry if you only borrow one Parent PLUS Loan in Fall 2024. Leave your existing double-consolidated Direct Consolidation Loan out of this step. Also, complete the Payment Plan Request Form and select the Standard Repayment Plan for this consolidation. Send your application to a different servicer than the one you’re already with.

2. Combine both of your Direct Consolidation Loans

Once the new Direct Consolidation Loan for your Fall 2024 Parent PLUS Loan(s) is settled, use the online application to combine your two Direct Consolidation Loans together. Select the servicer that currently oversees your original double-consolidated Direct Consolidation loan.

For example, if MOHELA services your original Direct Consolidated loan under the SAVE plan and your Nelnet servicers your new Direct Consolidation loan, send the final consolidation application to MOHELA for processing.

3. Submit your IDR application and proof of income

After consolidating both Direct Consolidation Loan apply for the income-driven repayment plan of your choice. Don’t forget to provide a copy of your income documentation.

Scenario E: You’ve done a double-consolidation on all your existing Parent PLUS loans, and will borrow more loans in Fall 2024 AND Spring 2025.

We DON’T recommend completing a consolidation of any 2025 Parent PLUS Loans without getting assistance from an Student Loan Planner consultant. 

Attempting to doubly consolidate a Spring 2025 Parent PLUS Loan in such a short period of time before the cliff is risky to perform on your own. Your new Parent PLUS Loans might be disbursed later in the semester, or the consolidation process might take longer than usual.

There might be an opportunity to get these loans through the double-consolidation process in time, but the strategy must be handled accurately as there won’t be time to correct errors prior to the July 2025 cliff. The circumstances under which this is possible are limited.

Additionally, there are many variables that borrowers can’t control, such as when your new Parent PLUS Loan posts to your account, paper applications getting lost in the mail, and how long the servicer takes to process the consolidation request.

Protecting your prior double-consolidated Direct Consolidation Loans is priority number one. Don’t compromise your ability to pay back the bulk of your loan portfolio on a generous IDR plan, because the consolidation of your newest Parent PLUS Loan(s) went awry.

That said, there’s possibly an opportunity to add a Spring 2025 loan that disburses early to an existing consolidation from Fall 2024 — one that hasn’t been double-consolidated yet. In this scenario, there might be time to complete the double consolidation loophole in time before July 2025.

Here’s an example of how this could work:

• You borrow a Parent PLUS Loan in Spring 2024 and another in Fall 2024.
• You consolidate the Spring 2024 Parent PLUS Loan on its own using a paper application. This creates a Direct Consolidation Loan.
• You consolidate your Fall 2024 Parent PLUS Loan on its own using a paper application, thus, creating a new Direct Consolidation Loan.
• You’ll now have three total Direct Consolidation Loans:
  • Loan #1 is the original double-consolidated Direct Consolidation Loan that’s on your IDR plan of choice. 
  • Loan #2 is the Direct Consolidation Loan for the Spring 2024 Parent PLUS Loan. Loan #3 is the Direct Consolidation Loan for the Fall 2024 Parent PLUS Loan.
• You then borrow a Parent PLUS Loan in Spring 2025.
• You then fill out a request to add the Spring 2025 Loan to your Fall 2024 Direct Consolidation Loan. You can add new loans to an existing consolidation within 180 days of creation.
• Finally, you consolidate loans #2 and #3, completing a double-consolidation strategy, while leaving loan #1 uncompromised.

Handling Parent PLUS Loans borrowed after July 2025

The Dept. of Education announced it will no longer let Parent PLUS borrowers complete the double-consolidation loophole after the July 2025 cliff. If you’ve completed double-consolidation for any of your loans prior to July 2025, take great care to protect it from future consolidations.

You can continue paying your double-consolidated Direct Consolidated Loan on PAYE, IBR or SAVE. New, unconsolidated Parent PLUS Loans will only have access to the fixed repayment options, and new Parent PLUS Loan consolidations can only access the ICR plan. 

You’ll be on two different repayment plans in this scenario: one repayment plan for your old double-consolidation loan, and another for your new Parent PLUS Loan(s).

You might also find yourself in a situation where pursuing loan forgiveness programs is the best option for a double-consolidated Direct Consolidation Loan, while paying newer Parent PLUS Loans in full is the best option.

Plan carefully, if you have an enrolled student after July 2025

• Save in advance. Estimate the cost of attendance for future attendance and develop a college savings plan. Consider saving for your child’s education in a 529 Education Savings Account or Coverdell account.
• Create a loan repayment map. If there isn’t enough time to save for the full cost of attendance, plan out a repayment strategy or explore forgiveness options.
• Consider other loan options. Weigh the pros and cons of Parent PLUS vs. private loans.
• Decide on a parent borrower. Strategically choose a parent who should take out Parent PLUS Loans. 
• Look into PSLF. Investigate your eligibility for Public Service Loan Forgiveness (PSLF).
• Submit a Free Application for Federal Student Aid (FAFSA). Complete a FAFSA each year to see if your child qualifies for need-based grants and federal work-study.
• Seek out gift aid. Encourage your child to apply for scholarships or grants.
• Explore affordable college paths. Consider lower cost alternatives like community college for two years, and then transfer to a university.

Borrowing more Parent PLUS Loans after a double consolidation

The double-consolidation strategy is nuanced, and the July 2025 cliff only adds to the complexity of this repayment loophole.

Consider strategically taking advantage of the double-consolidation loophole on Parent PLUS Loans taken out in Spring 2024 and Fall 2024 to access generous repayment plans before the cliff. 

Take great caution before consolidating Parent PLUS Loans borrowed in Spring of 2025. Be prepared for the reality that these loans might not finish the double-consolidation strategy in time. Remember, you don’t have to face this alone. Schedule a consultation today to get help with your Parent PLUS Loan repayment strategy.

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