4 Strategies for Repaying Federal Parent PLUS loans

When it comes to student loan debt, 20- and 30-something college graduates aren't the only affected population.

Parents are just as susceptible to over-borrowing as their children -- maybe more so.

While dependent undergraduates can borrow a maximum of $31,000 in subsidized and unsubsidized student loans, parents can take on up to the cost of attendance -- minus any other aid received -- in Parent PLUS loans.

And that can add up quickly. More than 3 million Parent PLUS borrowers owe nearly $62 billion, or about $20,000 per borrower, according to data from the Department of Education.

For these parent borrowers, "their major earning years have since passed in most cases," says John Collins, managing director of GL Advisor, a financial advisory firm for advanced degree professionals with student loan debt. And their repayment options are limited.

[Learn four ways that older students can avoid student debt.]

For example, Mom and Dad may want to transfer the PLUS loan to Junior once he's graduated. After all, it's his degree and his debt, right?

Wrong.

"Parent PLUS loans cannot be transferred from the parent to the child, nor can they be combined with the student's federal loans through consolidation," said Jan Miller, president of Miller Student Loan Consulting, in an email.

But while parents can't pass off the debt on their children, they do have other options for managing it. Here are four.

1. Consolidate to earn eligibility for an income-contingent plan: Income-contingent repayment, an earlier, less generous version of the Pay As You Earn and income-based repayment plans, may be an option for parents who consolidate their Parent PLUS loans, say experts.

[Understand four income-driven student loan repayment plans.]

Borrowers paying on the income-contingent repayment plan pay 20 percent of their discretionary income for up to 25 years. And, unlike IBR and Pay As You Earn, borrowers don't need to meet income requirements to qualify under the plan. But the most benefit comes from having a high debt-to-income ratio.

Even parents with a single loan may consolidate it so that it's eligible for income-contingent repayment, says Miller.

"So, if you have just one Parent PLUS loan, and no other loans in your name, you can still consolidate this loan so that it is no longer a Parent PLUS loan, but a consolidated loan," he says.

Like their children, parents can also repay student loans through the standard 10-year plan, extended repayment and the graduated plan, which increases the borrower's monthly bill regularly, usually every two years.

2. Consider Public Loan Forgiveness: Parents employed in qualified government and nonprofit jobs may qualify for public service loan forgiveness, which forgives remaining debt, tax-free, after 120 on-time payments.

Parents on the standard 10-year plan will have nothing to forgive after 10 years of payments. But those on the income-contingent plan may be able to see some amount wiped away by the government.

Something that aging parents should keep in mind, says Collins, is that they may not want -- or be able -- to work for another decade.

3. Refinancing may be an option, with risks: Parents may be able to refinance through a private group.

"In my opinion, parents are good candidates for refinancing," says Andrew Josuweit, CEO of Student Loan Hero, an online platform that helps students manage their loans. "The chances of getting approved are pretty high."

They might find that refinancing lowers their interest rate. Parent PLUS loans currently carry a 7.21 percent rate. At Citizens Bank, which offer s the option to Parent PLUS borrowers, for example, a loan refinanced at a fixed rate may go as low as 4.74 percent while variable rates start at 2.31 percent.

But there is a trade-off to private loan refinancing. "Refinancing leaves you without the protection of federal government programs," says Collins.

Those include deferment and public service loan forgiveness, says Miller.

And this isn't a strategy for parents who are struggling to repay their PLUS loans. "It's really hard to get approved," he says.

4. Look at the whole financial picture: Parent borrowers are very different from student borrowers and have different assets and concerns.

They may be close to retirement, which can make for a tough financial balancing act.

[Ask these seven questions to college financial aid officers.]

In 2013, 17 percent of Parent PLUS loans held by borrowers ages 65 to 74 were in default, according to a report from the Government Accountability Office.

Parents should balance repayment against their retirement accounts and other obligations. "This is one where prospective families should really look at how this thing is going to impact the whole family down the road," says Collins.

Trying to fund your education? Get tips and more in the U.S. News Paying for College center.

Susannah Snider is an education reporter at U.S. News, covering paying for college and graduate school. You can follow her on Twitter or email her at ssnider@usnews.com.