Move your child’s student loans into their name, score a lower rate — or both.
But not all lenders work with Parent PLUS Loans, and you and your child typically need strong personal finances to get a competitive deal.
Can I refinance a Parent PLUS Loan?
Yes, you can refinance a Parent PLUS Loan. There are two ways to do this:
Not all lenders are willing to refinance Parent PLUS Loans, however, and some might offer different rates and terms. Make sure you and your loans are eligible for refinancing before you apply.
Top 6 lenders for Parent PLUS refinancing
|Lender||Fixed APR||Variable APR||Loan amounts||Terms||Eligibility requirements|
|SoFi||3.899% to 7.979%|
|2.47% to 6.99% with autopay|
|Starting at $5,000||5 to 20 years||Must be an employed US citizen with a minimum loan balance of at least $5,000.|
|Laurel Road||2.80%–7.02% with autopay||3.05% to 6.47% with autopay||Starting at $5,000||All loans must be for qualified higher education expenses and in grace or repayment status and cannot be in default. You must have annual income of $60,000 or higher.|
|Education Loan Finance (ELFI)||3.39% to 6.69%||2.8% to 6.01%||Starting at $15,000||five to 20 years||$15,000+ in student debt, child earned bachelor’s degree or higher from eligible school, meet credit requirements|
|CommonBond||3.20-7.25% with autopay||2.5% to 7.24% with autopay||$5,000 to $500,000||5 to 20 years||Child earned bachelor’s degree or higher from eligible school, 2+ years since child graduated|
|Earnest||3.89% to 7.89% with autopay||2.57% to 6.97% with autopay||Starting at $5,000||5 to 20 years||Child graduated or will within six months from eligible Title IV school, applicant and cosigner meet credit requirements|
|Citizens Bank||3.50%–8.34% with autopay||2.90%–8.00% with autopay||$10,000 to $350,000||5, 10, 15 or 20 years||US citizen, permanent resident or resident alien; make at least $24,000; at least $10,000 in student debt; made at least 12 full, on-time repayments if you don't have a bachelor's degree or 3 full payments if you do.|
Rates accurate as of December 2018
SoFi is one of the most popular refinancing companies out there — and for good reason. It offers a long list of membership perks, including financial and career advice, networking events and unemployment protection.
As an online lender, applying involves filling out a quick online application. If you’re looking to transfer the loan to your child’s name, your child must apply with the option of adding you on as a cosigner. Otherwise, you can apply yourself, with or without a cosigner.
However, it can be difficult to qualify for a more competitive rate if you don’t have good to excellent credit.
Laurel Road allows you to refinance a PLUS Loan in your name or your child’s name as long as they can meet the lending requirements or they apply with an eligible cosigner. You can check what rates you might qualify for by filling out a quick online form. And if you like the offer, you can continue through to the full application.
Your child doesn’t need to have a degree to qualify for refinancing, so Laurel Road could be ideal if you want to refinance as soon as possible. But its income requirements are a bit higher than most refinancing companies, potentially making it difficult to refinance in your child’s name without a cosigner.
Since ELFI offers some of the lowest rates out there for Parent PLUS refinancing, you’ll likely be able to get a better deal by refinancing. Plus, it has a temporary forbearance program, so you may be able to pause repayments for up to 12 months if you hit a financial rough patch.
However, it’s not for everyone. Your child must have a degree in order to qualify. And loan terms are capped at 10 years for Parent PLUS Loans — most other lenders offer terms up to 20 years for lower monthly repayments.
CommonBond is a direct online lender that offers Parent Plus refinancing with the standard fixed and variable rates, as well as a hybrid option. The latter allows you to pay off your loan with a fixed rate for the first five years and a variable rate for the last five years. With CommonBond, you’re responsible for filling out the online application even if you’re refinancing in your child’s name, which typically takes a few minutes.
But it’s not ideal if you’re looking to refinance right away — your child must have graduated at least two years ago to be eligible. It also isn’t available to residents of Idaho, Mississippi, Nevada or Vermont.
Earnest is an online lender that allows you to choose your rates and terms based on how much you want to pay each month — not the other way around like most lenders. You can also refinance your Parent PLUS Loan as soon as six months before your child’s graduation. You can apply by first filling out a quick online form to see what your rates might be. If you’re happy with what you see, continue on to the full application.
However, it’s not available to residents of Alabama, Delaware, Kentucky, Nevada or Rhode Island. And it can be difficult to qualify if you don’t have near-perfect credit.
If you already have an account with Citizens Bank — or are willing to open one — this might be the lender for you. It offers a 0.25% rate discount to borrowers who have an eligible account. It also allows you to refinance Parent PLUS Loans for multiple children, so you only have to worry about one application and one monthly repayment. Even better, your children can still be in school.
To apply online, you’ll first fill out a quick form to check your rate. If you like the potential offer, you can continue on to the full application. But you need at least $10,000 to qualify and its maximum variable rates are slightly higher than the competition.
How does Parent PLUS refinancing work?
Parent PLUS refinancing works by taking out a new loan with a private lender to pay off your federal Parent PLUS Loans. While the application process varies by lender, expect to follow a version of these steps:
- Decide how you want to refinance. If you want to refinance in your name, you can typically get started right away. But if you want to refinance in your child’s name, consider waiting until they’re financially stable enough to qualify on their own — unless you want to be their cosigner.
- Compare lenders. Make sure you, your child and your loans are eligible before comparing APRs, terms and other features that are important to you like deferment and forbearance options.
- Prequalify. Once you’ve narrowed down your options, most lenders allow you to fill out a quick online form to get an estimate of the rates and terms you’re eligible for, if at all.
- Complete the application. If you’re applying to refinance in your name, you can complete the application yourself. Otherwise, check with your lender to find out if you or your child should complete it. At this point, your lender will do a hard credit pull, which temporarily lowers your or your child’s credit rating.
- Submit documents. Some lenders request documents after you’ve completed the application, such as a statement from your federal loan servicer and a recent pay stub.
- Review your offer and sign your loan documents. Your offer might not have the same rates and terms as you saw in your initial quote. If you’re happy with it, read the terms and conditions before signing the loan documents.
- Start repaying your loan with your new lender. Many private lenders use other companies called servicers to handle loan repayments. Your servicer will be your point of contact if you have any questions about repayments or want to apply for deferment or forbearance.
The whole process can take between a few business days to over a month, depending on your lender.
Is it smart to refinance a Parent PLUS Loan?
Refinancing a Parent PLUS Loan can potentially save you money and free up your personal debt load. But there are some situations where it might not be a good idea.
Consider refinancing if …
- You have strong credit. The better your credit rating and general financial health, the more likely you’ll qualify for favorable rates and terms.
- You have a high rate on your loan. Current Parent PLUS Loans come with an interest rate of 7.6% — many refinancing companies cap rates at or below this.
- Your child can qualify on their own. Refinancing in your child’s name allows you to lower your debt load, which can improve your credit and make it easier to qualify for other types of financing.
Consider holding off if …
- You’re struggling with repayment. In this case, you might have a hard time qualifying. Instead, reach out to your servicer to see if you can adjust your repayment plan or consider consolidation.
- You could benefit from an income-based repayment plan. Generally, private lenders don’t offer repayment plans based on your income. But consolidating makes you eligible for income-contingent repayments.
- Your credit score took a hit. It can be hard to qualify for Parent PLUS refinancing at all with less-than-stellar credit, let alone competitive rates.
Parent PLUS Loan consolidation
If you’re struggling with your Parent PLUS Loans and want to take advantage of the benefits that come with other types of federal loans, you may want to consider consolidating them with a federal Direct Consolidation Loan.
While you won’t save on interest — it’s a weighted average of your current rates — you’ll be eligible for more flexible repayment plans and even some forgiveness programs.
Compare student loan refinancing rates
Refinancing your Parent PLUS Loan can help you save on interest or transfer the debt to your child. But you may want to consider a Direct Consolidation Loan instead if you’re looking to adjust your term or take advantage of more benefits that come with federal loans.
Learn more about how student loans work by reading our guide.