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Refinance or Transfer Parent PLUS Loans: Compare Options

Dec. 4, 2018
Loans, Student Loans
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Refinancing federal parent PLUS loans can help you save money by lowering your interest rate or getting you off the hook for the loan completely by transferring the loan to your child.

There are two methods of refinancing a parent PLUS loan:

  • You, the parent borrower, can refinance the loan in your name
  • Your child can refinance the loan in his or her name and take on the repayment responsibility

Refinancing isn’t right for you if you have bad credit, struggle to make monthly loan payments or want to access federal benefits including income-driven repayment plans and student loan forgiveness programs.

» MORE: How to refinance parent PLUS loans

Parent PLUS refinance options

Rates start at about half of what the government charges for PLUS loans. Compare up-to-date rates among lenders on NerdWallet’s student loan refinance page.

LenderCan you transfer a parent loan to the child?Get started

5.0 NerdWallet rating
SoFi review
5.0 NerdWallet rating
CommonBond review

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Discover review

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Earnest review

4.5 NerdWallet rating
Laurel Road review

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Citizens One review

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Purefy review

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Education Loan Finance review

How to refinance parent PLUS

PLUS loan interest rates from recent years range from 6.31% to 7.9%, depending on the year in which you borrowed. You can get a lower rate by refinancing your PLUS loan if you have good credit and enough income to cover your expenses and debts. Here’s how:

  1. Estimate your savings. You should refinance if you have a credit score at least in the high 600s, are comfortable giving up federal loan benefits and can qualify for a lower rate. Use a student loan refinance calculator to see how much you’d save by lowering your PLUS loan rate.
  2. Compare refinance lenders. Shopping around is the best way to ensure you get the lowest interest rate you qualify for. The table below lists lenders that offer parent PLUS loan refinancing. Many lenders allow you to get pre-qualified without harming your credit. They’ll conduct a soft credit pull to estimate your rate.
  3. Apply. Lenders will do a hard credit check before finalizing your new rate. If you’re approved, the lender will pay off your existing loans and you’ll make payments to the new lender. The loan will still be your responsibility to repay, not your child’s.

The government doesn’t give parents the option to shift PLUS loans into their child’s name. Even if your child makes payments on your PLUS loan, you’re still ultimately responsible for the debt. However, a growing number of private lenders allow children to refinance their parents’ loans, effectively transferring responsibility for the loan.

The process and requirements for your child to refinance your PLUS loans in their name are the same as if they were refinancing their own student loans with a private lender. To qualify, they’ll need good credit, a strong history of making loan payments and enough income to afford payments — or a co-signer who meets those qualifications.

The table above lists lenders that allow children to refinance PLUS loans on behalf of their parents. Lenders include Purefy, CommonBond, Laurel Road and SoFi.

Federal student loan consolidation won’t lower your interest rate, but it’s a hoop parent PLUS loan borrowers must jump through to make their loans eligible for certain federal loan programs. Apply for federal consolidation on the Federal Student Aid website.

There are two main reasons to consolidate your parent PLUS loans through the federal government:

  • If you want to lower your monthly payments by switching to an income-contingent repayment plan
  • If you want to pursue Public Service Loan Forgiveness

Income-contingent repayment is the only income-driven repayment plan that parent PLUS loan borrowers can qualify for. Under the plan, your monthly payments will be capped at 20% of your discretionary income or the amount of your fixed monthly payments on a 12-year loan term, whichever is lower. Your loan term will be extended to 25 years.

Public Service Loan Forgiveness can cancel some of your student loan debt if you make 120 on-time payments while working for the government, a 501(c)(3) nonprofit or another nonprofit that provides a qualifying public service. To get the most money forgiven, parent PLUS loan borrowers need to make all 120 payments on an income-contingent repayment plan.


» MORE: 5 parent PLUS loan repayment options

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