How to Transfer Parent PLUS Loan to Student

If you’ve taken out Parent PLUS loans, you may be able to transfer the debt to them after they graduate. You might consider this option if your child has exhausted their allotment of federal student loans and wants to avoid private loans. 

While you can’t transfer federal loan debt to your child, several student loan refinance lenders allow parent loan transfers through refinancing. This process makes it easy for you to help your child and then allow them to take over the debt when they’re financially ready. Here’s what you need to know about how to transfer a Parent PLUS loan to a student.

Table of Contents

1. How to transfer a Parent PLUS loan to the student
   1. 1. Talk to your child
   2. 2. Help them shop around
   3. 3. Have them apply
   4. 4. Wait for approval
   5. 5. Continue making payments
2. Pros and cons of transferring a Parent PLUS loan to a student 
3. Should you transfer your Parent PLUS plans to the student?
4. Alternatives to consider
   1. Consolidate to a federal Direct Consolidation Loan
   2. Look into forgiveness programs
   3. Cosign your student’s refinance loan
   4. Encourage the student to contribute to payments
5. Bottom line

How to transfer a Parent PLUS loan to the student

If you took out one or more Parent PLUS loans to help your child get through school, and you want them to take on the responsibility of paying off the debt, here are the steps you can take to make the transfer.

1. Talk to your child

Before you can transfer a Parent PLUS loan to your child, they’ll need to agree to it. If you haven’t already had this conversation, it’s important to make sure that your child understands the responsibility, has good credit, and can take on the financial burden.

2. Help them shop around

Not all private lenders will allow you to transfer Parent PLUS loans, so your child will need to shop around. Our highest-rated options to consider include SoFi, Laurel Road, and ELFI. As they shop around, encourage them to get prequalified with multiple lenders so they can compare interest rates, repayment terms, and other features.

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Best Student Loan Refinance Companies 

3. Have them apply

Once your child chooses a lender, they can apply through the lender’s website. As they go through the application process, they’ll need to include the Parent PLUS loan and indicate that it’s under your name. Keep in mind that if your child doesn’t have a strong credit history or income, you may need to cosign the application.

4. Wait for approval

After submitting the application, you’ll typically find out whether your child has been approved within a week—though it can take longer in some cases if you cosign the application. 

The lender might reach out for additional information or documentation. If this happens, it’s important for your child to respond promptly to avoid potential delays. 

5. Continue making payments

If your child is approved, they’ll sign the loan agreement, and the loans will be transferred within a few weeks. To avoid potential issues, it’s important to continue making payments on your loans until you’ve confirmed a zero balance. 

If you end up overpaying, your student loan servicer will issue a refund to you.

Pros and cons of transferring a Parent PLUS loan to a student 

While transferring Parent PLUS loan debt to your child has several clear benefits, it’s also important to consider the potential drawbacks. Here’s what to keep in mind.

Pros

• Releases you from the loan

  Unless you cosign the new application, you’re no longer responsible for making payments toward the debt. This can be beneficial if you’re experiencing financial difficulties or you’re concerned about the impact of student loan payments on your retirement.

• Your child may qualify for better terms

  Parent PLUS loans charge the highest interest rate among federal student loans, and many private refinance companies offer lower rates to borrowers with excellent credit. If your child’s creditworthiness is solid or you can help by cosigning, they may be eligible for better terms.

• Can help your child build credit

  If your child has yet to establish a good credit history, transferring your Parent PLUS loans to them can help them do so. Just keep in mind that you’ll likely need to cosign the application if this is the case.

Cons

• You’ll lose federal benefits

  Whenever you refinance a federal student loan with a private lender, you’ll no longer have access to relief options, such as forgiveness programs, income-driven repayment, or forbearance and deferment options. 

• It could hinder your child’s financial progress

  If your child agrees to take on responsibility for your Parent PLUS loans before they’re ready, it could become a significant financial burden. In this scenario, your child could have a difficult time working toward other financial goals, such as saving for retirement and buying a home. If they can’t keep up with payments, it could even damage their credit.

• You may need to cosign

  If your child’s credit isn’t in good enough shape to get approved on their own, you might need to cosign the application. While that still shifts the primary responsibility for repayment to your child, you’ll need to step in if they can’t keep up with payments.

Should you transfer your Parent PLUS plans to the student?

To determine whether refinancing Parent PLUS loans in your child’s name is the best option, it’s important to consider a few factors:

• Your child’s readiness: Ultimately, your child must apply for a refinance loan to take over the debt. As such, you won’t be able to start the process unless your child is willing and ready for it. If you’re ready before your child is, you may need to exercise patience as they prepare themselves for the burden.
• Your child’s financial situation: Before transferring debt to your child, it’s crucial to make sure that they can take on the obligation without creating financial hardship or hindering their ability to work toward financial goals. 
• Potential loan terms: It generally only makes sense to refinance federal student loans if you can get better terms with a private lender. If your child can’t qualify for a lower interest rate, you may consider having them take over payments on your Parent PLUS loans instead.   
• Need for cosigning: You’ll also want to make sure your child has great credit, which can minimize the chance you’ll need to cosign the application. Being a cosigner is technically better than being the primary borrower. However, the loan will still show up on your credit reports, and you may still need to make payments in the future. 

Here are several example scenarios to further help you decide whether transferring Parent PLUS loans to your child is right for you:

If…	Transfer Parent PLUS Loans?
Your child has excellent credit and a strong income	Yes
Your child can comfortably afford to take on the payments	Yes
Your child can qualify for a lower interest rate and monthly payment	Yes
You’re willing to cosign if your child can’t qualify on their own	Yes
Your child is unwilling to take on the debt	No
You want to wait until you don’t need to cosign the application	No
Your child isn’t eligible for a lower interest rate on the new loan	No
Transferring the debt would create financial hardship for your child	No

If you’re a parent considering transferring Parent PLUS Loans to your child, the most important factor to consider is the financial impact on you—particularly whether loan payments could jeopardize your retirement planning. 

Equally critical are the students’ creditworthiness, their ability to secure more favorable loan terms, and their financial responsibility to maintain stability while pursuing other financial goals. Ultimately, this decision requires careful balancing of the financial well-being of both parties.

If you want to bring this topic up with your child, I recommend an open and honest conversation. If needed, you could explore alternative solutions, such as a gradual repayment plan over a set period before fully transferring the loan to the child. 

Consulting a financial counselor or providing a financial planning session for the student can offer valuable education and guidance. Involving a neutral third party with an objective perspective may help facilitate a more informed and constructive decision-making process.

Alternatives to consider

If transferring a Parent PLUS loan to the student isn’t feasible, other strategies may help reduce or manage the debt burden.

Consolidate to a federal Direct Consolidation Loan

Parent PLUS loans aren’t eligible for most income-driven repayment (IDR) plans, but consolidating into a federal Direct Consolidation Loan can open up access to the Income-Contingent Repayment (ICR) plan. 

This is currently the only IDR plan available for Parent PLUS loans, and it can lower monthly payments based on income and family size. While it won’t transfer the loan to the student, it can make payments more manageable for the parent.

Look into forgiveness programs

Parent borrowers may qualify for Public Service Loan Forgiveness (PSLF) if they work in a qualifying public service job and make 120 qualifying payments under an ICR plan. 

While forgiveness options for Parent PLUS Loans are limited, some state- and employer-based programs may also offer partial forgiveness. Be sure to explore state-specific forgiveness programs or niche forgiveness opportunities, such as those for healthcare professionals or educators.

Cosign your student’s refinance loan

Another alternative is to cosign your student’s private refinance loan. This method allows the student to take on the Parent PLUS loan in their name through refinancing with a private lender. The parent would serve as a cosigner, helping the student qualify for better rates. Once the student demonstrates a strong repayment history, some lenders may offer cosigner release options, allowing the parent to be removed from the loan later on.

Keep in mind that refinancing through a private lender will eliminate federal benefits, including IDR plans and loan forgiveness.

Encourage the student to contribute to payments

If transferring the loan isn’t an option, consider having the student take responsibility for payments. While this won’t change the legal ownership of the loan, it can provide financial relief for parents. Setting up an informal repayment arrangement can help students take more ownership of the debt, even if it remains under the parent’s name.

Bottom line

Taking on Parent PLUS loans can help your child get through school, but it can also create a significant financial burden for you in your later years. As you consider your options, take your time to research and compare the best student loan refinance lenders, along with other alternatives, to determine the best path forward for you.