11 Best Companies to Refinance Parent Plus Loans
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This article first appeared on the Credible blog.
Parent PLUS Loans might be a good way for parents to help their child pay for school. However, these loans generally come with higher interest rates than other federal student loans, which can make them expensive to pay off.
The good news is that many private lenders will refinance Parent PLUS Loans, which could help you get a lower interest rate or even pay off the loan faster. You might even be able to refinance the loan into the child’s name, depending on the lender.
Keep in mind: Due to the COVID-19 pandemic, payments and interest accrual have been paused on federal student loans — including Parent PLUS Loans — by the CARES Act through Aug. 31, 2022. If you refinance your federal student loans, you’ll lose access to this forbearance as well as other benefits like income-driven repayment plans and student loan forgiveness programs.
Here are Credible’s partner lenders that offer refinancing for Parent PLUS Loans. You can compare student loan refinance rates from these lenders when you visit Credible. It’s 100% free and seeing your prequalified rates won’t affect your credit.
Advantage
Advantage is one of the few lenders that allows parents to refinance Parent PLUS Loans into their child’s name. It also offers a graduated repayment plan that starts out with small payments that increase every two years.
This might make Advantage a smart choice for refinancing if you expect your income or your child’s income to grow in the future.
Pros
Can refinance up to $500,000 (depending on degree and loan type)
0.25% autopay discount
Can refinance Parent PLUS Loan into child’s name
Cons
No variable-rate options
Might be hard to qualify if you have poor or fair credit
Brazos
If you’re a Texas resident, Brazos might be a good option for refinancing. With Brazos, you can refinance $10,000 up to $400,000, depending on the student’s degree.
However, keep in mind that if you want to refinance Parent PLUS Loans into your child’s name, you’ll need to consider other lenders.
Pros
0.25% autopay discount
No application, origination, or disbursement fees
Competitive rates
Cons
Might not qualify if you have poor or fair credit
Only available in Texas
Can’t refinance Parent PLUS Loans into child’s name
Citizens
With Citizens, you can refinance $10,000 to $750,000 (depending on degree and loan type). You can also refinance Parent PLUS Loans into your child’s name.
Also keep in mind that if you already have an account with Citizens, you could get 0.25% off your rate — and another 0.25% discount if you sign up for autopay.
Pros
0.25% autopay discount
0.25% loyalty discount
Can refinance Parent PLUS Loan into child’s name
Cons
Doesn’t disclose minimum income or credit score requirements
Long cosigner release period (36 months)
Cosigner release not available on the Education Refinance Loan for Parents
College Ave
College Ave might be a good refinancing option if you’re looking for payment flexibility — you can choose from 16 repayment terms ranging from five to 20 years if you refinance with College Ave.
However, unlike some other lenders, College Ave doesn’t allow parents to refinance Parent PLUS Loans into their child’s name.
Pros
16 repayment terms available ranging from five to 20 years
0.25% autopay discount
Cosigner release offered after 24 months of consecutive, on-time payments
Cons
Doesn’t disclose minimum income or credit score requirements
Can’t refinance Parent PLUS Loans into child’s name
Not available in Maine
CommonBond
CommonBond provides refinancing to both graduates and parent borrowers from $5,000 to $500,000. It also allows parents to refinance Parent PLUS Loans into their child’s name.
Pros
0.25% autopay discount
Parents can transfer Parent PLUS Loans to student
Up to 24 months of forbearance over the life of the loan
Cons
Must have graduated from an eligible Title IV accredited university or graduate program
Charges late fees
Not available in Mississippi or Nevada
Education Loan Finance
Education Loan Finance (ELFI) offers refinancing starting at $15,000 with no set maximum, which could be helpful if you have large loan balances. Keep in mind that while parents can refinance Parent PLUS Loans with ELFI, they can’t transfer the loans into their child’s name.
Additionally, parents who refinance parent loans are limited to repayment terms of five, seven, or 10 years.
Pros
No loan maximum
Variable rates capped at 9.95% APR
Borrowers experiencing financial hardship could qualify for up to 12 months of forbearance
Cons
Can’t refinance Parent PLUS Loans into child’s name
Parent loan refinancing limited to repayment terms of five, seven, or 10 years
Cosigner release not offered
INvestEd
With INvestEd, you can refinance $5,000 to $250,000 and can choose a repayment term from five to 20 years. Additionally, INvestEd offers up to 24 months of forbearance (in one- to three-month increments) to borrowers experiencing financial hardship.
This could be especially helpful if you lose your job or find yourself in a financial emergency.
Pros
0.25% autopay discount
Up to 24 months of forbearance available over the life of the loan (one to three months per forbearance period)
Degree not required
Cons
Can’t refinance Parent PLUS Loans into child’s name
Long cosigner release period (48 months)
Might be hard to qualify if you don’t have good credit or high enough income
ISL Education Lending
ISL Education Lending offers a variety of refinancing options — including the ability to refinance while you’re still in school. In addition to a standard repayment plan, it also provides a graduated repayment plan for borrowers who choose a 10-, 15-, or 20-year term (seven-year terms are eligible in some cases). This type of plan starts with low payments that gradually increase over time.
Pros
0.25% autopay discount
Can refinance while still in school
Graduated repayment plan available
Cons
Can’t refinance Parent PLUS Loans into child’s name
Rates are sometimes higher than competitors
Might be hard to qualify if you don’t have good credit
MEFA
With MEFA, you can refinance $10,000 up to your total amount of qualified education debt, which could make it a good option for high loan amounts.
However, keep in mind that MEFA refinancing is available only to students who attended public or nonprofit universities — if your loans were used to pay for a for-profit school, you’ll need to consider other lenders.
Pros
No maximum loan limit
Degree not required
Competitive rates
Cons
No discounts
Cosigner release not offered
Can’t refinance Parent PLUS Loans into child’s name
PenFed
PenFed is a unique refinancing lender: It’s the only lender that allows spouses to refinance their loans together, and it also allows parents to refinance Parent PLUS Loans into their child’s name. With PenFed, you can refinance $7,500 to $300,000 and can choose a repayment term from five to 15 years.
Pros
Can refinance Parent PLUS Loan into child’s name
Can consolidate loans with your spouse
Short cosigner release period (12 months)
Cons
Might be hard to qualify if you don’t have good credit or high enough income
No discounts
20-year term not available
RISLA
The Rhode Island Student Loan Authority (RISLA) could be a good choice if you think you might face financial hardship — unlike other refinancing lenders, RISLA offers an income-based repayment (IBR) plan that caps your payment at 15% of your discretionary income.
Plus, if you make on-time payments for 25 years under this IBR plan, RISLA will forgive any remaining balance you might have.
Pros
0.25% autopay discount
Income-based repayment plan available
Can defer payments for up to 36 months if you return to graduate school
Cons
Can’t refinance Parent PLUS Loans into child’s name
20-year term not available
Might be hard to qualify if you don’t have good credit or high enough income
You can compare prequalified rates from these lenders when you visit Credible. It takes just minutes to see your rates and learn more about your options.
Other student loan refinancing lenders to consider
Other lenders also offer student loan refinancing for Parent PLUS Loans. However, keep in mind that the lenders in the table below aren’t Credible parents, which means you won’t be able to compare them through Credible.
Methodology
Credible evaluated loan and lender data points in 12 categories to identify some of the “best companies” for refinancing Parent PLUS loans that also offer refinancing in the student’s name. Editors looked at interest rates, repayment terms, repayment options, fees, discounts, customer service availability, and maximum loan balances offered by 20 lenders. They also considered each company’s willingness to refinance parent loans, eligibility, cosigner release options, whether the minimum credit score is available publicly, and whether consumers could request rates with a soft credit check.
How to refinance Parent PLUS Loans
If you’re ready to refinance Parent PLUS Loans, the process might vary depending on whether you’re the parent or the student who benefitted from the loan. Here’s how to refinance student loans in either situation:
As the parent
If you want to refinance Parent PLUS Loans you took out for your child’s education, follow these steps:
Shop around and compare lenders. It’s a good idea to compare as many lenders as you can to find the right loan for you. Also keep in mind that while some lenders allow you to transfer Parent PLUS Loans into your child’s name, others don’t — this means you’ll likely have fewer lender options to choose from if you want to refinance the loan into your child’s name.
Pick your loan option. After you’ve compared lenders, choose the loan option that best suits your needs.
Complete the application. Once you’ve chosen a lender, you’ll need to fill out a full application and submit any required documentation they request, such as past loan statements, documents regarding your income and assets, or proof of graduation. If you’re refinancing the loan into your child’s name, your child might need to complete the application — be sure to double-check with the lender to see what’s required.
Manage your loan payments. If you’re approved, be sure to keep up with payments on your old loan while the refinance is processed. Also consider signing up for autopay so you won’t miss future payments.
As the student
If you want to take over Parent PLUS Loans that you benefited from, follow these steps:
Make sure you qualify. You’ll typically need good credit and verifiable income to qualify for refinancing. Before taking over a Parent PLUS Loan, make sure you can meet these requirements.
Compare lenders and choose a loan option. Not all lenders allow PLUS Loans to be refinanced from your parent’s name to yours, so be sure to keep this in mind as you compare lenders. Also consider interest rates, repayment terms, and any fees charged by the lender. After comparing student loan refinance companies, choose the loan option you like best.
Complete the application. To apply for refinancing, you’ll need to fill out a full application and submit any required documentation, such as tax returns, pay stubs, or student loan information.
Prepare for your payments. If you’re approved, the Parent PLUS Loan will be paid off, leaving you with the newly refinanced loan to repay. Consider signing up for autopay so you won’t miss any payments in the future — many lenders even offer rate discounts if you opt for automatic payments.
How much you could save when refinancing Parent PLUS Loans
Refinancing your Parent PLUS Loans could help you save money and potentially pay off your loans faster. However, the exact amount you might save depends on several factors, such as your current interest rate as well as your credit.
You can use Credible’s student loan refinance calculator to see how much you can save by refinancing your student loans.
When you should (and shouldn’t) refinance student loans
While refinancing could be a smart move, it’s not the right choice for everyone.
When refinancing might be a good move
You can get a better interest rate. Refinancing might get you a lower interest rate than you currently have, depending on your credit. This could save you money on interest charges over time — and might even help you pay off your loan ahead of schedule.
You want your child to take over repayment of the loan. In some situations — such as if you’re nearing retirement or if your child has graduated and secured a solid job — you might want your child to take over responsibility for a Parent PLUS Loan. This is only possible through refinancing.
You need a lower monthly payment. If you’re struggling to manage your student loan payments, you could opt for a longer repayment term through refinancing. This will likely lower your monthly student loan payment, lessening the strain on your budget.
When refinancing might not be a good idea
You can’t get a lower rate. If you already have a low interest rate on your student loan, then refinancing might not be worth it.
You don’t want to lose your federal loan benefits. Parent PLUS Loans are a type of federal student loan, which means you have access to federal protections, such as deferment, forbearance, and other federal repayment options. Additionally, if you consolidate your Parent PLUS Loans, you could qualify for an income-driven repayment plan. However, if you refinance your PLUS Loans, you’ll lose access to all of these protections.
You have poor credit. While some lenders offer refinancing for bad credit, these loans generally come with higher interest rates compared to good credit loans. If you have bad credit, it might be a good idea to work on building your credit before you apply for refinancing. This way, you’ll likely have an easier time getting approved and might qualify for better rates and terms.
Tip: If you can qualify for a lower interest rate through refinancing, you could save a substantial amount of money on interest charges over time. For example, if you want to pay off $30,000 in student loans or even pay off $50,000 or more in student loans, you might save hundreds or thousands of dollars through refinancing. Also keep in mind that you might get a lower rate if you opt for a shorter repayment term when refinancing. It’s generally best to choose the shortest repayment term you can afford to save the most you can on interest over the life of your loan.
How to get the best interest rate when refinancing Parent PLUS Loans
Here are a few tips that could help you secure a good rate when refinancing Parent PLUS Loans:
Improve your credit score. To get the best rates possible, you’ll typically need good to excellent credit. If you have poor or fair credit, it could be a good idea to spend some time building your credit to qualify for better rates in the future. A few potential ways to do this include making on-time payments on all of your bills, paying down credit card balances, and avoiding new loans when possible.
Apply with a cosigner. If you’re struggling to get approved for refinancing, applying with a cosigner could improve your chances. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.
Compare lenders. Rates vary from lender to lender. Be sure to compare as many lenders as you can to find an interest rate that works for you.
Comparison shopping is an important step toward finding the best interest rates available to you. Credible makes it easy to compare student loan refinance rates from multiple lenders.
About the author: Aly J. Yale is a mortgage and real estate authority. Her work has appeared in Forbes, Fox Business, The Motley Fool, Bankrate, The Balance, and more.
The post 11 Best Companies to Refinance Parent Plus Loans appeared first on Credible.