Company Name
|
Est. APR
|
Min. credit score
|
Loan Amount
|
Loan term
|
Laurel Road
|
1.89% - 6.2% variable
3.49 - 6.3% fixed
|
660
|
$5,000+
|
5 to 20 years
|
Earnest
|
1.74% - 7.99% variable
2.99% - 7.99% fixed
|
650
|
$5,000 to $500,000
|
5 to 20 years
|
SoFi
|
1.74% - 7.99% variable
3.49% - 7.99% fixed
|
650
|
$5,000+
|
5, 7, 10, 15, or 20 years
|
PenFed
|
Starting at 5.49% fixed
|
670
|
$7,500 to $300,000
|
5, 8, 12, or 15 years
|
RISLA
|
Starting at 4.29% fixed
|
680
|
$7,500 to $250,000
|
5, 10, or 15 years
|
CommonBond
|
2.24% - 7.34% variable
2.94% - 6.99% fixed
|
680
|
Up to $500,000
|
5, 7, 10, 15, or 20 years
|
What Is a Parent PLUS Loan?
A parent PLUS loan is a federal loan provided to the parent
or guardian of a dependent undergraduate student. Parent PLUS loans can be
taken out in large amounts, up to the cost of attendance (minus any financial
aid that the student has been awarded). These loans are not subsidized, which
means interest starts to accrue as soon as funds have been disbursed. Parent
PLUS loans are unique in that the student is under no legal obligation to repay
the loan; the parent or guardian who borrowed the funds is fully responsible
for repayment.
When Should You Refinance Parent PLUS Student Loans?
While refinancing parent PLUS loans is a great option for
many borrowers, it’s not always the best solution. Refinancing should be
considered a viable option if:
- You want to consolidate multiple parent PLUS loans into one:
If you have several parent PLUS loans—either taken out for multiple children or
for different school years—you can refinance them all into a private loan so
you can enjoy the convenience of a single monthly payment.
- You can get a lower interest rate: You may be able to get a
better interest rate by refinancing your parent PLUS student loans, especially
if you have good credit. In the past decade, APRs on parent PLUS loans have
reached up to 7.9%; you can save a significant amount of money if you refinance
those loans at a lower rate.
- You need a lower monthly payment: Parents who are struggling
to afford the required monthly payment should consider refinancing. You may be
able to find private loans with longer repayment terms and lower interest
rates, which will reduce your monthly payment and ease the strain on your
finances.
- You want your child to take over the loans: If your child
has graduated from university and secured a good job, you may want to consider
having them take responsibility for repayment. This can’t be done through the
federal government, but it is possible with parent PLUS refinance lenders.
How Does Parent PLUS Loan Refinancing Work?
Parent PLUS loan refinancing is pretty straightforward; in
essence, all you need to do is find a lender that offers loan terms you like,
apply, and wait for approval. However, you will need to keep up with your
federal PLUS loan payments as you’re going through the process. Thankfully, it
shouldn’t take long—funds are typically disbursed within a week of loan
approval. Once you receive notification that your old loan has been paid off,
you can start making repayment with your new lender.
What Are My Options for Repaying Parent PLUS Loans?
There are several options available to parents who are
repaying parent PLUS loans. Of course, parents could continue repaying their
loans through the federal program, but this may not work for everyone. Parents
who are struggling with high interest rates or exorbitant monthly payments
should consider other options, such as federal consolidation of their loans,
income-based repayment plans, or refinancing with a private lender.
How Can I Repay Parent PLUS Loans Quickly?
If you’re looking for ways to pay off your parent PLUS loans
more quickly, there are a few ways to accomplish this:
- Pay more per month on the standard repayment plan.
- Ask your child to contribute to payments (keeping in mind
they’re not legally obligated to make repayment on parent PLUS loans).
- Refinance your parent PLUS loans with a lower interest rate
and shorter repayment period.
Can You Refinance Parent PLUS Loans in Your Child’s Name?
Yes, it is possible to refinance parent PLUS loans and make
repayment your child’s responsibility. This can only be done through select
private lenders, however; the federal lending program plus some private loan
companies don't offer this option. It’s also important to note that your child
must meet all the loan qualifications first, including credit score,
debt-to-income ratio, and work history.
How to Refinance Parent PLUS Loans
The best way to refinance parent PLUS loans differs slightly
depending on whether you’re the original borrower wanting to refinance your own
loans or a university graduate who wants to take over loans for your parents.
Parents Refinancing Their PLUS Loans
If you’re a parent who took out parent PLUS loans to pay for
your child’s university education and you want to refinance, you should:
- Do Your Research: Before refinancing your parent PLUS loans,
take time to do your research and make sure it’s the best option available to
you.
- Select Your Preferred Lender: Once you’ve determined that
loan refinancing is the best choice, you’ll then need to check the terms and
interest rates offered by various lenders and make comparisons to find one that
meets your needs.
- Fill Out the Loan Application: After selecting your
preferred lender, gather all the documentation you’ll need, including personal
identification, proof of income, and payoff statements from your current
lender.
- Sign Loan Documents: If your application is approved, your
lender will have you sign a loan agreement before paying off your parent PLUS
loans.
- Start New Loan Payments: You’ll need to start making
payments on your new loan once your federal parent PLUS loans have been paid
off and switched to the new lender. It’s a good idea to sign up for automatic
withdrawal to be sure you don’t miss any payments.
Students Refinancing Their Parents’ PLUS Loans
If you’re a university graduate who wants to repay the PLUS
loans your parents took out for your education, you should:
- Check the Loan Qualifications: Loan qualifications might be
tough to meet, especially for a recent college graduate; you’ll need to be sure
you meet the minimum requirements for credit score, work history, and
debt-to-income ratio before applying.
- Calculate Your Budget for Repayment: Before applying for
parent Plus refinancing, you should also figure out how much you can afford to
pay per month.
- Compare Lenders: After determining the repayment amount your
budget will allow, start looking at various lenders and pre-qualify for a few
offers to see what terms they offer; then you can pick the one that best fits
your budget.
- Complete the Application: Once you’ve selected the lender
that best meets your needs, it’s time to gather your documents and complete the
loan application.
- Begin Making Payments: After your loan is approved and the
old parent PLUS loan has been paid off, you’ll typically have about a month
before repayment on the new loan begins. To ensure you don’t miss any payments,
consider signing up for autopay.
How Do You Get The Best Interest Rate When Refinancing
Parent PLUS Loans?
Here are a few tips to ensure you get the best parent PLUS
loan refinance rates:
- Meet Your Financial Obligations: Make sure to pay all your
bills on time, especially loan and credit card payments.
- Maintain A Solid Work History: Having a stable income and
working at the same place for several years can help you secure a better
interest rate.
- Improve Your Credit Score: The higher your credit score, the
better the interest rates you’ll qualify for. You can improve your credit score
by eliminating errors on your credit report, increasing the available credit on
your credit cards, and paying down balances on revolving credit.
- Apply With A Cosigner: Some lenders may allow you to have a
cosigner, which could help you earn a better interest rate.
- Compare Offers: Take time to look at several different
lenders to find the best place to refinance parent PLUS loans. Prequalify with
a few of your favorites and compare their offers to find which lender offers
the best interest rate.
Conclusion
Parent PLUS loan refinancing is a great way to roll all your
loans into one at a reduced interest rate, potentially saving you thousands of
dollars over the lifetime of the loan. Refinancing also allows you to have your
child take over repayment of the educational loans they benefited from.
However, refinancing may not be the best option for
everyone; if you have a low credit score, limited income, or spotty work
history, you may struggle to qualify for the lowest interest rates. Take time
to research all the options, prequalify with a few lenders to discover what
interest rates are available to you, then decide if refinancing your parent
PLUS loans will be advantageous in the long run.