5 Lenders to Consider When You Refinance Parent PLUS Loans

To help your child when it came to paying for their college tuition, you took out a Parent PLUS Loan in your name which you’re solely responsible for repaying. But the reality is that you can’t transfer the loan to your child. And on top of that, interest rates on Parent PLUS Loans are at 5.30%, the highest out of all federal loan options.

If you want to catch a break from high interest rates, you might be wondering if refinancing would be a good idea. Refinancing Parent PLUS Loans could be a smart move if it saves you money in interest charges or allows you to transfer the parent loans to your child. But if you’re currently taking advantage of federal benefits with your parent loans, you might want to avoid refinancing them to a private lender.

In this guide, we’ll share which lenders allow you to refinance Parent PLUS Loans and how to do it.

A look at student loan refinancing

When you refinance your Parent PLUS Loan, you work with a private lender to score a refinancing loan at a better interest rate. The new loan would pay off your existing Parent PLUS Loan and you’d receive a new, lower interest rate. Taking out private student loans at a better rate would lower your monthly payment. It could also mean saving thousands of dollars in interest over the life of the loan by allowing you to put more money toward your principal balance.

5 lenders offering Parent PLUS Loan refinancing

If you’re looking at refinancing Parent PLUS Loans, here are five student loan refinancing companies to check out. Many of them allow you to check your prospective interest rate before applying.

In our student loan refinancing survey, we found that many borrowers only apply with one private lender. To get the best rate, research interest rates from various lenders, and weigh the pros and cons of their terms.

We’d suggest focusing on options 1 and 2, below, since CommonBond and Laurel Road are the main lenders that let you transfer a Parent PLUS Loan to your child’s name. Other private lenders might only offer the ability to refinance Parent PLUS Loans in the parent’s name. Also, know that if you use our referral links you’ll be eligible for internet-leading cash-back bonuses.

1. CommonBond

One student loan refinancing company to consider is CommonBond. CommonBond allows Parent PLUS borrowers to refinance their student loans and get a lower interest rate. To qualify, you must meet the same eligibility requirements that are set for students.

For one, your child must have graduated from an eligible Title IV accredited university or graduate program. Additionally, you must meet certain credit score requirements to get approved.

If approved, CommonBond offers fixed-rate and variable-rate refinancing option, and even a “hybrid” (a combo of the two) interest rate option. On the low-end, rates start at 1.92%* and cap at 8.49%*.

The fixed-rate and variable options come with repayment terms of:

• 5 years
• 7 years
• 10 years
• 15 years
• 20 years

The hybrid option has a 10-year loan term. CommonBond’s loans refinancing program stands out by providing borrowers with up to 24 months of forbearance and upholds its “social promise” to fund a child’s education in a developing country with every loan that’s taken out. Plus, you can get up to $1,050 in cash back when you use our bonus link to apply for refinancing.

2. Laurel Road

Once your child graduates, you can apply to refinance your Parent PLUS Loan through Laurel Road. For borrowers with a good credit score, Laurel Road can offer fixed or variable rate loans as low as 1.89%*. But, your APR could be as high as 6.00%*, so you’ll want to make sure you actually could save money given your current interest rate.

Aside from various APR offerings, there are a few repayment term options to choose from:

• 5 years
• 7 years
• 10 years
• 15 years
• 20 years

Compare Laurel Road’s terms to the repayment terms on federal student loans which starts at 10 years on a Standard Repayment plan. A shorter repayment term means getting out of debt faster. But it also means having higher monthly payments.

Laurel Road will also allow you to refinance Parent PLUS Loans in your child’s name. Of course, you’d need their consent to transfer the student loans to their name. If your child is ready and willing to pay back this chunk of student loan debt, they’d still need to meet eligibility and income requirements to qualify.

Student Loan Planner readers can also get a cash bonus of up to $750 by refinancing through our Laurel Road link.

3. Earnest

Earnest offers Parent PLUS Loan refinancing with variable rates as low as 1.99%* for borrowers with a strong credit score. Fixed rates start at 2.89%* when you sign up for autopay.

It also offers some unique perks. For example, you can skip a payment and make it up later, adjust your payment date and set up a payment based on your budget. Essentially, you determine what you can afford and based on that amount Earnest offers you a corresponding rate and loan term.

This gives you ultimate flexibility in picking a repayment term and monthly payment that works for your budget. If you refinance with Earnest through Student Loan Planner, you’ll receive a cash bonus of up to $500 (for refinancing more than $100,000).

4. SoFi

SoFi (available through our partner, Credible) is another leader in the student loan refinancing space and also allows Parent PLUS borrowers to refinance their student loans.

You can apply to SoFi via Credible and get a large cash back bonus.

It offers a variable rate or fixed APR with rates as low as 2.25%* and high as 5.94%*. A 0.25% interest rate discount is applied if you sign-up for autopay. SoFi offers refinancing repayment terms of:

• 5 years
• 7 years
• 10 years
• 15 years

You can also transfer your parent loans to your child, with their consent. As an added benefit, if you apply for SoFi refinancing through our Credible bonus link, you can get a cash bonus of up to $1,250 if you refinance more than $100,000 ($350 bonus if you refinance less than that).

5. PenFed

It’s not just student loan refinancing companies that could offer you a better rate on your Parent PLUS Loan. PenFed Credit Union offers refinancing on Parent PLUS Loans through Splash Financial. PenFed offers variable APRs as low as 2.25%* and fixed rates starting at 2.99%.

Unlike many of its competitors, PenFed doesn’t offer a 10-year repayment plan term. So you won’t be able to directly match the term of the Standard Repayment Plan with PenFed. However, it does offer repayment terms of:

• 5 years
• 8 years
• 12 years
• 15 years

You can also refinance your Parent PLUS Loans into your child’s name using PenFed if your child’s willing to take on the monthly payment. Get up to a $500 bonus when you apply using our Splash Financial link.

*Rates may change and are determined, in part, by your credit history.

How to refinance Parent PLUS loans

Each of the five refinancing companies listed above have different eligibility requirements. The process on how to apply and refinance your Parent PLUS Loans varies as well. Here are a few general guidelines to follow when refinancing Parent PLUS Loans.

1. Check your interest rate. Look at how your Parent PLUS Loan rate differs from your prospective rate at each student loan refinancing company. Calculate how much you can save in interest to determine if refinancing makes sense.

2. Look at eligibility requirements. Read the fine print and check out the eligibility criteria (such as graduation or minimum credit score requirements) for each private lender.

3. Gather your information. To streamline the application process, gather the information you might need to provide to the lender, including your current loan amount, monthly payment, loan servicer, and income.

4. Apply. Once you’ve checked your rate, know the eligibility requirements, and gathered your information, it’s time to apply! Continue making payments on your Parent PLUS Loans until your refinancing application is approved and finalized.

5. Make payments on your new loan. Once your old student loans are paid off with the refinancing loan, start making payments on your new loan to stay in good standing and keep your credit score in good shape.

What to know before refinancing Parent PLUS Loans

The benefit of refinancing Parent PLUS Loans can be huge, but it also comes at a cost.

Refinancing takes your federal student loans and pays them off, leaving you with a private loan. In other words, you give up federal benefits like various Income-Driven Repayment (IDR) plans, loan forgiveness programs, and the option to apply for federal loan consolidation.

Evaluate whether the savings from a lower interest rate are worth giving up those protections. It’s a personal decision that varies by situation. If you have good credit and job stability, refinancing your Parent PLUS Loan with a private lender might be a good option. However, if there’s a chance you might need to join an income-driven repayment plan down the road to lower your monthly payment, staying the course might be better.

Need more guidance? Get in touch with us!

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