Parent PLUS Loan Refinancing: Things to Know Before Refinancing

Parent PLUS Loan Refinancing: Things to Know Before Refinancing.

Parent PLUS Loan Refinancing: You took out a Parent PLUS loan in your name to help your child pay for their college tuition, which you are solely responsible for repaying. But the reality is that you can’t pass the loan to your daughter, and on top of that, interest rates on PLUS loans are the highest of all federal loan options at 7.6 percent.

Parent PLUS Loan Refinancing

You might consider refinancing if you want to catch a break from high interest rates. We will share in this guide that lenders will require you to refinance loans from Parent PLUS and how to do it.

A look at student loan refinancing

You partner with a private lender to obtain a refinancing loan at a higher interest rate while refinancing the student loan. The new loan would pay off your existing loan from Parent PLUS and you would receive a new loan lower interest rate. Going along this path would mean saving thousands of dollars in interest over the life of the loan and allowing you to spend more money on your main balance.

5 lenders offering Parent PLUS loan refinancing

If you’re looking at refinancing Parent PLUS loans, here are five student loan refinancing companies to check out. Many of them allow you to check your prospective rate before applying.

We found that many borrowers apply only with one refinancing company in our student loan refinancing survey. Study interest rates from different firms and the pros and cons of their terms to get the best rate.

We would recommend that you concentrate on options 1 and 2, as the key lenders are Commonbond and Laurel Road which allow you to move a Parent PLUS loan to the child’s name. Other creditors could only offer the ability to refi loans from Parent PLUS with the name of the parent. You will be eligible for our internet leading cash back rewards to refinance if you get a better deal if you use our referral links.

1. CommonBond

CommonBondCommonBond is another student loan agency to consider. CommonBond allows lenders from Parent PLUS to refinance their student loans and receive a higher interest rate. You must meet the same eligibility requirements for students in order to apply.

As one thing, your child must have graduated from a qualifying college or graduate program approved by Title IV. In fact, in order to be accepted, you must meet certain credit requirements.

If accepted, CommonBond provides interest rate options that are adjustable, fixed and even “hybrid” (a combination of the two). Rates start at 2.61 percent* and peak at 7.35 percent* at the low-end.

Fixed and variable options are offered in terms of repayment:

  • 5 years
  • 7 years
  • 10 years
  • 15 years
  • 20 years

The hybrid option has a repayment term of 10 years. CommonBond stands out in their refinancing offers for providing borrowers with up to 24 months of forbearance and also has a “social promise” to fund a child’s education in a developing country with every loan that is taken out.

2. Laurel Road

Laurel RoadWhen your child graduates, you can apply to refinance your Parent PLUS loan through Laurel Road. Laurel Road offers fixed or variable APR as low as 3.24%*. But, your APR could be as high as 7.02%*, so you want to make sure you’re actually saving money given your current rate.

Aside from various APR offerings, there are a few repayment term options to choose from:

 

  • 5 years
  • 7 years
  • 10 years
  • 15 years
  • 20 years

Compare the conditions of Laurel Road with the terms of repayment of federal student loans, which begins on a regular repayment plan at 10 years. A shorter term of maturity means getting out of debt faster, but it also means higher monthly payments.

Another option offered by Laurel Road enables you to refinance the loan in the name of your daughter. Of course, to move the loan to their title, you would need their consent. If your child is ready and able to repay this chunk of student loan debt, they would still have to meet eligible qualifications and income criteria.

3. Earnest

EarnestWhen you sign up for autopayment, Earnest offers Parent PLUS refinancing with variable rates as low as 2.57%* and fixed rates as low as 3.89%*.

It also offers some unique advantages. You can, for instance, miss a payment and make it up later, change the payment date and set up a budget-based payment. Essentially, you decide what you can afford and Earnest offers you a matching rate and term based on that number.

It makes payments more borrower-friendly and can fluctuate the duration of repayment in a way that is favorable to you.

4. SoFi

SoFiSoFi is another leader in the refinancing space for student loans and also allows borrowers from Parent PLUS to refinance their loans.

Now, you can apply for Sofi via Credible and get a big cash back bonus.

You may opt for a fixed or adjustable APR with rates as low as 2.47%* and as high as 7.50%*. When you sign up for autopay, a 0.25% discount will be applied. SoFi proposes terms of compensation for refinancing:

  • 5 years
  • 7 years
  • 10 years
  • 15 years

You can also transfer your Parent PLUS loan to your child, with their consent.

5. PenFed

PenFedIt’s not just refinancing companies that offer Parent PLUS refinancing. PenFed credit union offers Parent PLUS refinancing that’s available through Splash Financial. PenFed offers fixed and variable rates starting as low as 3.14%* up to 7.88%*.

They offer repayment terms of:

  • 5 years
  • 8 years
  • 12 years
  • 15 years

You can also refinance your loans into your child’s name using PenFed as well if your child is willing to take on the repayment.

*Rates may change and are determined by your credit.

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How to refinance Parent PLUS loans

Each of the five refinancing companies listed above have different eligibility requirements. The process on how to apply and refinance your Parent PLUS loans varies as well. Here’s a general guideline of how to refinance Parent PLUS loans:

1. Check your rate. Look at how your current rate differs from your prospective rate at each student loan refinancing company. Calculate how much you can save in interest to determine if refinancing makes sense.

2. Look at eligibility requirements. Read the fine print and check out the eligibility requirements for each student loan refinancing company.

3. Gather your information. To streamline the application process, gather the information you might need to provide to the lender, including your current loan amount, loan servicer, and income.

4. Apply. Once you’ve checked your rate, know the eligibility requirements, and gathered your information, it’s time to apply! Continue making payments on your student loans until your refinancing application is approved and finalized.

5. Make payments on your new loan. Once your old loans are paid off with the refinancing loan, start making payments on your new loan to stay in good standing and keep your credit in good shape.

What to know before you refinance Parent PLUS loans

What to know before you refinance Parent PLUS loans

The advantages of refinancing a Parent PLUS loan can be a huge, but it also comes at a cost.

Refinancing takes away and pays off your federal student loans, leaving you with a private loan. In other words, you are sacrificing federal protection, like the various repayment plans, deferment and forbearance, and the prospect of consolidating and seeking income-contingent repayment.

Assess that lower interest rate savings are worth giving up those guarantees. It is a personal decision that differs from situation to situation. If your reputation is strong and you have a stable job and income, it could be a good option to refinance. However, if you think you’re going to have a chance to delay or lower your fees, it might be better to stay the course.

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