Parent Plus Double Debt Consolidation Loophole

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Author: Joseph Reinke, CFA

Many parents find themselves in a financial bind due to Parent PLUS student loans. These loans, while indispensable in facilitating higher education for their children, do not qualify for income-driven repayment plans, leaving parents with potentially crippling repayment amounts.

However, through a little-known double debt consolidation loophole, it’s possible to work around this rigid system.

This intriguing method involves two strategic steps, allowing these Federal Parent Plus loans to become eligible for income-driven repayments.

However, this window of opportunity is closing fast.

With changes slated for the 1st of July 2025, the time to act is now, to potentially alleviate the financial burden and navigate your way around the inflexible framework of Parent Plus loans.

Who Can Benefit From The Double Debt Consolidation Loophole

The double debt consolidation loophole offers considerable relief to those burdened by Parent PLUS student loans.

For instance, consider a borrower earning $50,000 annually, encumbered with $100,000 of Parent PLUS loans.

The Income-Contingent Repayment (ICR) monthly payment for this borrower would amount to a hefty $590.

By leveraging the double debt consolidation loophole, however, the borrower could switch to the new SAVE plan, which would reduce their monthly payment to a much more manageable $143.

This striking difference underscores the importance of understanding and capitalizing on this loophole, especially for borrowers under significant financial strain.

The two main categories of borrowers who stand to benefit from this will be discussed in the following sections.

Parents In Or Approaching Retirement

Parents who are nearing retirement and have Parent PLUS loans stand to greatly benefit from the double debt consolidation loophole.

As they transition into their retirement years, the goal is often to minimize financial stress and secure a comfortable lifestyle.

A large monthly loan repayment can pose a significant obstacle in achieving this.

By leveraging the double debt consolidation loophole, these parents can significantly reduce their monthly repayment amount.

This reduction in financial obligation can substantially enhance their financial security as they move into this new phase of life.

How Children Can Benefit From The Double Debt Consolidation Loophole

The double debt consolidation loophole can also be an advantageous strategy for children who have been tasked with repaying Parent PLUS loans.

Many of these individuals are already burdened with their own student loans and the additional responsibility of repaying Parent PLUS loans can exacerbate their financial stress.

By utilizing the double debt consolidation loophole, the monthly repayment amount of the Parent PLUS loan can be significantly reduced.

This would mean the child would need to set aside a smaller portion of their income for this repayment, providing some much-needed financial relief.

Understanding and using this loophole could be a game-changer for children dealing with the twin burdens of their own and their parents’ student loans.

The Mechanism Behind The Double Debt Consolidation Loophole

The double debt consolidation loophole operates due to an interesting quirk in the loan consolidation process.

When a borrower consolidates a consolidation loan that was used to repay a Parent PLUS Loan, the new consolidation loan becomes eligible for income-driven repayment plans.

This happens because the loan servicer loses track of the original nature of the loan — that it was a Parent PLUS loan.

The loan servicers do not have the ability to trace the nature of the original loan once it has been consolidated for the second time.

Consequently, the consolidated loan is treated as a regular loan and not as a Parent PLUS loan.

In essence, this technique leverages the operational blind spots of the loan servicers to work in favor of the borrowers.

Double Debt Consolidation Loophole Steps

Here is a brief summary of the steps involved in utilizing the double debt consolidation loophole:

  1. Ensure you have at least two Parent PLUS loans.
  2. Submit paper consolidation loan applications to two different servicers to consolidate these Parent PLUS loans. DO NOT USE the online consolidation tools for this step as they will be merged together which invalidates this loophole.
  3. You must request for Income Contingent Repayment (ICR) specifically, or your application may be rejected.
  4. Wait for 30-45 days to receive confirmation that the consolidation process for the two loans is complete.
  5. Following successful consolidation, you must then consolidate these two loans again. This time, you can do so online at and with a new servicer. The third servicer must be different from the previous two, as the third sevicer is unaware that you’ve consolidated Parent PLUS loans.

By following these steps, the new consolidated loan loses its Parent PLUS loan tag, becoming eligible for income-driven repayment plans.


In closing, the double debt consolidation loophole presents an opportunity for parents and children alike to reduce the financial stress imposed by Parent PLUS loans dramatically.

However, navigating the intricacies of this process can be complex and potentially daunting.

At FitBUX, we specialize in helping borrowers understand and effectively leverage this loophole to minimize their loan repayments.

Our team of experts will guide you through every step of the process, ensuring you maximize your savings and secure your financial future.

Remember, the window for this opportunity is closing fast. Visit today to take the first step towards relieving your financial burden.

Joseph Reinke, CFA

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About the Author

Joseph Reinke is a Chartered Financial Analyst (CFA) Charter Holder and founder of FitBUX which has helped over 14,000 young professionals on their journey to financial freedom. Joseph has been personally investing since he was 12 years old.

In addition, he has experience in student loans, mortgages, wealth management, investment banking, valuation, stock trading, and option trading. He has been on 100s of podcast and has been invited to 100s of universities to discuss financial planning with their soon to be graduates.

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