Best Lenders to Consolidate and Refinance Parent PLUS Loans
Reviewed by: Scott Birmingham CFP
Scott Birmingham is a dedicated financial services professional with nearly 20 years' experience advising families and small business owners on all aspects of their financial picture.
As a parent, you can refinance Parent PLUS loans in your name to lower the interest rate or you can refinance it into your child's name. Debt consolidation is yet another option for Parent PLUS loans, but there are several factors you should weigh to figure out the best choice for your situation.
Here's what you need to know about refinancing Parent PLUS loans to help you decide.
- How Can I Refinance Parent PLUS Loans?
- Can a Parent PLUS Loan Be Transferred to the Student?
- Best Lenders to Consolidate and Refinance Parent PLUS Loans
- Alternative Repayment Options
How Can I Refinance My Parent PLUS Loan?
You can refinance Parent PLUS loans by working with a private lender. By refinancing, you will likely have a new repayment plan that can help speed up the repayment process, as well as reduce the overall cost of your federal student loan.
>> Jump to: Compare Parent PLUS Loan Refinance Options
Can a Parent PLUS Loan Be Transferred to the Student?
Another option available is to transfer the Parent PLUS loan to your child. They will then assume the responsibility of the student loan.
How to Transfer Parent PLUS Loans to a Child
In order to transfer the Parent PLUS loan to your child, you will have to both agree to it. You can’t transfer the loan to your child based on the Department of Education’s guidelines. However, what you can do is refinance the loan in your child's name.
Your child applies and will need to include income information. In order for this to be a viable option, your child will need to have an adequate income. The application process usually requires the child to have earned at least a bachelor’s degree or higher.
Benefits of Transferring to a Child
The benefits of transferring a federal Parent PLUS loan are that you are no longer responsible for making loan payments. The new loan will likely have a lower interest rate than the original loan, and it’s entirely in the child's name. The child will now be able to build credit history.
Negatives of Transferring to a Child
In general, if the Parent PLUS loan is refinanced it can cause you to lose federal loan program protections including the Public Service Loan Forgiveness option and income-contingent repayment plans. Also, the child will then bear the responsibility of the loan and that could create a financial or legal burden.
Best Lenders to Refinance Parent PLUS Loans
SoFi
SoFi is one of the biggest lenders advertising Parent PLUS Loan Refinancing. Along with the opportunity to save, there are other perks for going with SoFi.
Interest Rates and Terms
SoFi advertises fixed APRs that start at 3.899% for refinancing the Parent PLUS loan. There are variable interest rates as low as 2.790% APR. Both of these rates are available when borrowers enroll in automatic payments. There are no prepayment penalties, and there’s the opportunity to get a 0.125% rate discount if you’re a SoFi member.
Variable rates are capped at 8.95% to 9.95% APR depending on the loan term.
Eligibility
To be eligible, borrowers can submit online preapproval information and then select the loan plan they’re interested in. The lowest rates are reserved for borrowers with a strong credit history.
To be eligible, the student must have completed an undergraduate or graduate degree program. SoFi Parent PLUS student loan refinancing is available for undergraduate and graduate loans.
Can You Transfer the Loan to Your Child?
SoFi is one of the private lenders that will let holders of the Parent PLUS loan refinance as a way to transfer it to their child.
Earnest
Earnest provides low variable rates for people who refinance a Parent PLUS loan through them, as well as discounts for participating in autopay.
Interest Rates and Terms
Earnest interest rates start at 2.47% if the borrower is enrolled in autopay, and the rates go up to a fixed APR of 3.89% with autopay. There is a lot of flexibility in loan terms, and options go from 5 up to 20 years.
Earnest offers refinancing for undergraduate and graduate loans, including private student loans and federal student loans.
There are no origination, application, or prepayment fees.
Eligibility
Earnest strives to offer a unique application and approval process for people who want to refinance Parent PLUS loans. They don’t just look at the credit score of the applicant, but they try to account for a wide variety of factors. There are no set income requirements, either.
To be eligible for refinancing, the student must have completed their degree.
Can You Transfer the Loan to Your Child?
Earnest does not offer the option to transfer Parent PLUS loans to a child.
Laurel Road
Laurel Road is a lender that offers refinancing options as soon as a student graduates. Laurel Road’s focus is on refinancing student loans that are related to law, medical, engineering and MBA degrees but others may be eligible as well.
Interest Rates and Terms
The available variable interest rates available from Laurel Road are currently anywhere from 2.80% APR to 6.38% APR with autopay. The fixed rates range from 3.50% APR to 7.02% APR, also with autopay enrollment.
Repayment term options are 5, 7, 10, 15 and 20 years. A 0.25% reduction in interest rate is available with automatic payments made via ACH.
Eligibility
For parents to be eligible for student loan refinance through Laurel Road, their child must have a bachelor’s degree and must have graduated and be working. Otherwise, to be eligible for refinancing through Laurel Road, borrowers must have completed a bachelor’s or graduate degree program in a certain field of study.
Eligible areas of study include MBA, law, post-residency medical or dental, physician assistant, advanced degree nursing, pharmacist, engineering, or Ph.D.
Can You Transfer the Loan to a Child with This Lender?
Yes, Laurel Road offers the option for parents to refinance a Parent PLUS Loan in their name, or in their child's name.
CommonBond
CommonBond provides customizable refinancing options and low rates for people who hold a Parent PLUS loan.
Interest Rates and Terms
According to CommonBond, their variable rates for refinancing the Parent PLUS loan range from 2.72% APR to 7.25% APR. For a fixed-rate loan, the APR varies from 3.20% to 7.25%. CommonBond also offers a hybrid loan, with rates ranging from 4.30% APR to 6.31% APR.
The terms for the fixed and variable rate refinance loans are anywhere from 5 to 20 years. For the hybrid loan, the terms are 10 years.
There are forbearance options of up to 24 months, no prepayment penalties, and no origination fees.
Eligibility
Eligibility requirements to refinance through CommonBond are similar to other lenders. The child must have completed school and should have received a minimum of a bachelor’s degree from an eligible school. For students with a bachelor’s degree, it must be at least 24 months since they graduated in order for the loan to be transferred to them through refinance.
To transfer the loan to the student, they also need to meet certain income and credit requirements or have a qualified cosigner.
Can You Transfer the Loan to a Child With This Lender?
CommonBond allows loan holders to refinance student loans in the name of their child if the child meets eligibility requirements.
Parent PLUS Loan Consolidation
Another option, aside from the options above, is the consolidation of Parent PLUS loans. There are federal loan consolidation options available for holders of Parent PLUS loans. This combines all federal loans into one loan with a new lower rate. Extending the payment term can also create lower monthly payments. However, a longer payment term can result in paying more over time, so this is something to be aware of.
There are also private consolidation loans, which like federal consolidation do make repayment convenient but might not always be the most cost-effective decision in the long run.
Alternative Repayment Options
If you hold a Parent PLUS loan, there are alternatives to the traditional student loan refinancing options named above. These include:
- HELOC: This stands for Home Equity Line of Credit. You’re basically using the equity in your home to pay off student loan debt. There are risks to this option, including the fact that if you default on this loan you could lose your home.
- Unsecured Line of Credit: An unsecured line of credit doesn’t require you to use your home or anything else as collateral. You can repay loans, but this option is usually only available to the most creditworthy borrowers.
Deciding Which Option is Right for You
You have several options for refinancing and consolidating your federal Parent PLUS loans. For many people, the best option is to refinance through a private lender and get a reduced interest rate on a new private loan. If your child is employed and has a steady income, you might want to transfer the loan to them through a Parent PLUS loan refinance. These are typically better options than looking for alternatives.
