Lenders to Consider When Refinancing Parent PLUS Loans – 2020 Guide

Refinancing Parent PLUS Loans 2020 Lenders:

If you took a Parent Plus loan in your name to support your child with paying for their college tuition, you become solely responsible for repaying. But the truth is that interest rates on PLUS loans are at 7.6%, the highest out of all federal loan options.

If you want to take a break from high interest rates, you might be considering refinancing. In this guide, we’ll share which lenders allow you to refinance Parent PLUS loans and how to do it.

What Is A Parent PLUS Loan?

A PLUS loan is a federal loan that graduate students, or parents of dependent undergraduate students, can borrow to pay for college or a career school. Parent PLUS Loans, in particular, refer to loans borrowed by parents on behalf of a dependent undergraduate student.

The parent is the borrower, and the lender is the U.S. Department of Education. A parent can borrow an amount up to the cost of attendance, less any financial assistance received.

Can you Refinance your Parent PLUS Loans?

Yes, you can refinance Parent PLUS loans, but only through a private lender.

Although the U.S. Department of Education offers consolidation on federal student loans, it doesn’t offer refinancing. It also doesn’t allow you to transfer your Parent PLUS loans to your child, either. You need to refinance through a private lender for that.

If you choose to refinance your loans this way, you replace them with a private student loan. This means you’re no longer eligible for any potential benefits that are unique to federal student loans. That includes income-based repayment plans and loan forgiveness. Because there are very limited circumstances where Parent PLUS loans can be forgiven, this might not be a big deal.

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.

1. Earnest

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

It also offers some unique perks. For example, you can skip a payment and make it up later, adjust your payment date and set up a payment based on your budget. Essentially, you determine what you can afford and based on that amount Earnest offers you a corresponding rate and term.

This makes payments more borrower-friendly and can make the repayment term fluctuate in a way that is advantageous for you.

2. PenFed

It’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.

3. SoFi

SoFi is another leader in the student loan refinancing space and also allows Parent PLUS borrowers to refinance their loans.

You can apply to Sofi via Credible currently and get a large cash back bonus.

You can opt for a variable or fixed APR, with rates as low as 2.47%* and high as 7.50%*. A 0.25% rate discount is applied if you sign-up for autopay. SoFi offers refinancing repayment terms of:

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

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

4. CommonBond

Another student loan refinancing company to consider is CommonBond. CommonBond allows Parent PLUS borrowers to refinance their student loans and get a better interest rate. In order to qualify, you must meet the same eligibility requirements that are set for students.

For one, your child must have graduated from an eligible Title IV accredited universities or graduate program. Additionally, you must meet certain credit requirements to get approved.

If approved, CommonBond offers variable, fixed and even “hybrid” (a combo of the two) interest rate options. On the low-end, rates start at 2.61%* and cap at 7.35%*.

Fixed and variable options come with repayment terms of:

  • 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.

5. Laurel Road

Once 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 Laurel Road’s terms to federal student loan repayment terms, which starts at 10 years on a Standard Repayment plan. A shorter repayment term means getting out of debt faster, but it also means having higher monthly payments, too.

Another option Laurel Road offers allows you to refinance the loan in your child’s name. Of course, you’d need their consent to transfer the loan to their name. If your child is ready and willing to pay back this chunk of student loan debt, they’d still need to meet eligibility and income requirements to qualify.

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.

Transferring Parent PLUS loans to your child

The process for transferring Parent PLUS loans to your child is similar to the refinancing process described above. The difference is that your child needs to apply for the refinancing loan with their own information.

After they’re approved for the loan, they can use it to pay off your Parent PLUS loans.

There are two common reasons to do this:

  • You want to transfer responsibility for the student loans to your child.
  • You want to refinance your loans, but your child has a better credit score and could secure a lower interest rate.

FAQs 

What Is A Parent PLUS Loan?

A PLUS loan is a federal loan that graduate students, or parents of dependent undergraduate students, can borrow to pay for college or a career school. Parent PLUS Loans, in particular, refer to loans borrowed by parents on behalf of a dependent undergraduate student.

Can you refinance your Parent PLUS loans?

Yes, you can refinance Parent PLUS loans, but only through a private lender.

Are there reliable lenders offering Parent PLUS loan refinancing?

Of course. There are lenders, including, earnest, sofi, PenFed, Common Bond and Laurel road

Can you Transfer Parent PLUS loans to your child?

Yes you can. However, you have to follow due processes.

Why would I Transfer Parent PLUS loans to my child?

There are two common reasons to do this:

  • You want to transfer responsibility for the student loans to your child.
  • You want to refinance your loans, but your child has a better credit score and could secure a lower interest rate.

What to know before you refinance Parent PLUS loans

The benefit of refinancing a Parent PLUS loan can be a huge, but it also comes at a cost. Refinancing takes your federal student loans and pays them off, leaving you with a private loan. In other words, you give up federal protection, like the various repayment plans, deferment and forbearance, and the possibility to consolidate and pursue income-contingent repayment.

Evaluate whether the savings from a lower interest rate are worth giving up those protections. It’s a personal decision that varies by situation. If your credit is good and you have job and income stability, refinancing might be a good option. However, if you think there is a chance you would need to postpone or lower your payments, staying the course might be better.

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