Parent PLUS Loans: What Happens to Student Loans in a Divorce?

Sometimes happily ever after… isn’t so happy.Things get ugly, grow stale or just change — and there are divergent paths that ultimately lead to divorce.If you took out a Parent PLUS Loan for your child, you might be wondering what happens to student loans in a divorce.About Parent PLUS Loans First, let’s review a bit about Parent PLUS Loans and how they work.

These federal student loans are offered to parents of undergraduate students to help pay for the cost of attendance.Though the student loans pay for the child’s college expenses, the parent who took out the loan is solely responsible for it.Parent PLUS Loans come with steep interest rates — the highest out of all federal Direct loans.There's always been fewer repayment options available for parents, but major changes for Parent PLUS borrowers went into effect July 1, 2026.

Parent PLUS: Before July 1, 2026 If you have existing Parent PLUS Loans and don't take out any new loans after July 1, 2026, you can continue to repay them under the: Standard Repayment Plan Graduated Repayment Plan Extended Repayment Plan If you consolidated your Parent PLUS Loans with a Direct Consolidation Loan before the changes went into effect, you could become eligible for the Income-Contingent Repayment plan, or ICR for short.Once on ICR, you can switch to Income-Based Repayment (IBR).This can open the door to loan forgiveness options, like Public Service Loan Forgiveness (PSLF).Parent PLUS: After July 1, 2026 The rules are different for borrowers who take out any new Parent PLUS Loans or consolidate going forward.

These borrowers will only be eligible for the Tiered Standard Repayment Plan and will not have access to income-driven repayment plans — which effectively shuts down a path to PSLF for IDR forgiveness for new parent borrowers.The One Big Beautiful Bill Act (OBBBA) also changed how much parents can borrow.Beginning July 1, 2026, most Parent PLUS borrowers are subject to a $20,000 annual limit per dependent student and a $65,000 aggregate limit per dependent student for all Direct PLUS Loans borrowed for that student's undergraduate education.There is a limited exception for certain parents whose student was already enrolled in the same program at the same institution before July 1, 2026 and who meets the other requirements for the exception.

Parents who qualify for the exception remain subject to the previous borrowing rules, meaning they may generally borrow up to the student's cost of attendance minus other financial aid.Finally, note that regardless of when you took out Parent PLUS loans, you also can’t transfer your loan to your child — though there are loopholes to get around this that we’ll discuss later.What happens to Parent PLUS Loans after divorce? Divorce is one of the most stressful life events.When you have debt involved, you could be worried about what happens to student loans in a divorce.

Student loan debt and divorce add yet another financial consideration during a split.You might wonder: “Are student loans marital debt?” But when it comes to student loan debt and divorce, the person who took out the loan is typically responsible for paying the loan, even in divorce.Only one of the spouses can sign the promissory note on Parent PLUS Loans, so technically that’s who is responsible for the student loan in the case of divorce.“All debts are divided in a divorce,” explained divorce attorney Russell D.

Knight.“Usually this means the divorce decree will specifically assign each party specific debts to cover.For example, dad might take over the Parent PLUS Loans while mom takes over a car payment.” There may be something worked out as part of the divorce, but the person who signed the promissory note is still usually the one liable for the debt.But that doesn’t mean a family court won’t include that debt as part of the expenses and decide it should be covered by both parties.

“Some marital settlement agreements arrange a schedule to pay off loans together but it's very rare,” said Knight.Additionally, things might be different if you’re in one of the nine community property states.These include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. A divorce in a community property state could mean that assets and debts are divided 50/50, making both parties liable for the debt.Many divorce cases have levels of nuance that we can’t go into here.

If you want to determine for sure whether you’re responsible, consult a divorce attorney.Managing Parent PLUS Loans after divorce If you want to make your Parent PLUS Loans more manageable after divorce, you have several options.If you consolidated your Parent PLUS Loans before July 1, 2026, you should have preserved access to the ICR Plan.You only need to make one payment on ICR before you can move to the Income-Based Repayment (IBR) Plan, which will lower your monthly payments to 10% to 15% of discretionary income, depending on when you first borrowed.

If you have a remaining balance at the end of the repayment period, it will be forgiven.But you’ll want to prepare for the tax consequences, as the forgiven amount is considered taxable income in the eyes of Uncle Sam.We recommend saving through Betterment if pursuing this route.But if you missed the deadline to consolidate, your options are more limited.

Refinancing Parent PLUS Loans To save money on sky-high interest rates, you can refinance your Parent PLUS Loans.There are a few student loan refinancing companies that allow you to refinance Parent PLUS Loans.After a divorce, your finances can be ravaged, so being able to save money anywhere — especially on PLUS Loan interest — can help.Through refinancing, you may be approved for a lower interest rate.

The refinancing loan will be used to pay off your Parent PLUS Loans.So you’re essentially going from federal loans to private loans — higher APR to lower APR.While this can be a good move, approval depends on good credit.Not only that, but you give up federal loan benefits such as income-driven repayment, loan forgiveness programs and stronger borrower protections.

There’s also another alternative if everyone is on board to do it.If you don’t want to deal with the Parent PLUS Loans anymore and your child is willing to both take them on and make the required monthly payment, you could refinance the Parent PLUS Loans into your child’s name.This option is available through several refinancing companies.This way, you can get the loans off your hands.

Of course, your child has to agree to this, and you want to make sure they can get approved and handle the loan.Student loan debt and divorce Getting divorced is a messy process.Having debt involved can make it even more stressful.But if you have Parent PLUS Loans, the person who signed the promissory note is responsible for the loan.

Any other arrangement would likely come from a divorce judgment.