Parent PLUS Loan Fairness and Responsibility Act of 2026

This Act may be cited as the “Parent PLUS Loan Fairness and Responsibility Act of 2026”.

Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is amended by inserting after section 493D the following:

“493E. Transfer of Federal student loans from parent to child.—

(a) In general.— A covered parent loan may be transferred from the original borrower of the loan to a child of such borrower in accordance with this section.

(b) Transfer requirements.— A covered parent loan may be transferred to a child under subsection (a) only if—

(1) the loan is in good standing, as determined by the Secretary;

(2) the loan was used to pay the educational expenses of the child to whom the loan is to be transferred;

(3) the child to whom the loan is to be transferred—

(A) has attained the age of 18 years; and

(B) demonstrates the ability to repay the loan, as determined by the Secretary in accordance with subsection (c);

(4) the child, the parent, and the lender agree, in writing, to the transfer of the loan;

(5) the agreement described in paragraph (4) notifies the child to whom the loan is transferred of the effect of the transfer on the eligibility of the loan for forgiveness under section 455(m); and

(6) a period of 180 days has elapsed during which the child was not pursuing—

(A) at least a half-time course of study as determined by an institution of higher education; or

(B) a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for disabled individuals approved by the Secretary.

(c) Determination of ability To repay loan.— In determining the ability of a child to repay a covered parent loan under subsection (b)(3)(B), the Secretary shall consider the following:

(1) The child’s employment status, income level, and credit history.

(2) The total dollar amount of the loans proposed to be transferred to the child.

(3) The debt-to-income ratio of the child before such transfer.

(4) The projected debt-to-income ratio of the child after such transfer.

(5) Any other factors the Secretary determines to be relevant to the ability of the child to repay the loan.

(d) Treatment of transferred loan.—

(1) In general.— A covered parent loan transferred to a child under subsection (a) shall have the same terms, conditions, and benefits applicable to the loan before the date of such transfer except that—

(A) the child to whom the loan is transferred shall be treated as the original borrower of the loan;

(B) the parent who transferred the loan to the child shall not be responsible for paying—

(i) the outstanding balance of principal or interest on the loan; or

(ii) any other costs associated with the loan, including fees; and

(C) notwithstanding any other provision of law, at the election of the child to whom the loan is transferred such loan may be treated as a Federal Direct PLUS Loan for purposes of determining the eligibility of the loan for any repayment plan under this title.

(2) Origination date.— The origination date of a covered parent loan transferred to a child under subsection (a) shall be the date on which the loan was originally made to the parent of such child and such loan may not be treated as a new loan made after the date of such transfer.

(3) PSLF Payments.—

(A) In general.— Any qualifying PSLF payment made on a covered parent loan before the date of transfer to a child under subsection (a) shall be treated as a qualifying PSLF payment made by the child for purposes of determining the child’s eligibility for public service loan forgiveness under section 455(m).

(B) Qualifying PSLF payment defined.— In this paragraph, the term qualifying PSLF payment means a payment eligible to be counted toward the 120 monthly payment threshold described in section 455(m)(1).

(e) Effect on loan limits.— Notwithstanding any other provision of this Act, a covered parent loan transferred to a child under subsection (a) shall not be counted toward the child’s annual or aggregate maximum loan limits under this title.

(f) Covered parent loan defined.— In this section, the term covered parent loan means—

(1) a loan made to a parent on behalf of a dependent student under section 428B;

(2) a Federal Direct PLUS Loan made to the parent of a dependent student; or

(3) a loan made under section 428C or 455(g), to the extent that such loan was used to repay—

(A) a loan made to the parent of a dependent student under section 428B; or

(B) a Federal Direct PLUS Loan made to the parent of a dependent student.”.