As a parent, you did the right thing. When it was time to send your child to college, you took out a loan to help them realize their dreams. Now they are off on new adventures and you find yourself with a high-interest Parent PLUS Loan weighing down your future financial plans.
At this stage, you want to plan for the good life — a comfortable retirement, that dream vacation, your second honeymoon — all things that may have to be postponed or forgotten unless you rethink that Parent PLUS Loan.
You’re not alone — it’s estimated that over 3.4 million borrowers have federal Parent PLUS Loans for a total of over $87 billion in student financial aid.
These high-interest parent loans may help fund your child’s education, but they can also put a significant burden on your financial well-being as you plan for the future.
Why paying off Parent PLUS Loan is crucial for future success
Parent PLUS Loans are offered to parents of undergraduate students with a fixed interest rate. Each year, the rate is set by Congress and the federal government.
The amount of this set interest rate is often the highest among any of the government’s federal student loan options. And unlike private student loans, federal Parent PLUS Loans don’t recognize or reward outstanding credit or payment history to qualify for a lower rate.
With such high rates, this type of loan can be difficult to repay and linger on credit reports for a long time — while racking up large amounts of interest costs.
To make matters even more challenging, a Parent PLUS Loan is not eligible to be transferred to the student directly through the federal government — but could be transferred with a private student loan refinance for those who qualify.
How to speed up repayment of your Parent PLUS Loan
Getting out from under this high interest rate may be the most beneficial option to regain some of your financial freedom and flexibility. If you have a solid credit score and can comfortably meet the income requirements, the best solution may be to refinance your Parent PLUS Loan.
Like with a mortgage refinance, you are taking out a new loan with more agreeable terms to pay off the less favorable Parent PLUS Loan. This can be especially helpful during times when lower interest rates are being advertised by private student loan companies.
Consider the benefits of Parent PLUS Loan refinancing
So, you’re interested in how to pay off Parent PLUS Loans faster? By refinancing with a private lender, you will be able to secure a more favorable interest rate and repayment terms.
Consider these key benefits that are possible with Parent PLUS Loan refinancing:
- Lower your interest rate — By qualifying for a new loan, you could effectively lower your interest rate and choose more favorable repayment terms to fit your pay off goals. This gives you the potential to save money over the entire life of the loan. With flexible loan limits and the option to choose a fixed or variable interest rate, you can structure your refinance to suit your financial needs. You can also opt to pay the debt more quickly with a shorter term if that suits your needs to save even more on total interest.
- Lower your monthly payment — When refinancing, you have the flexibility to lower your monthly payments by expanding the number of years you choose for repayment of the loan. Some private lenders have terms between five and 20 years to allow you to customize your payment plan and get more wiggle room in your monthly budget, if needed.
- Consolidate your debt — If you have multiple federal and private student loans, refinancing allows you to consolidate your debt into one new loan with a single monthly payment. You no longer have to manage multiple payments, due dates, or pay off terms. Consolidation makes things easy and simple.
- Transfer loan repayment to your child — Is your child a new graduate? Do they have a great new job in their field? Are they ready to assume the repayment of the debt for their education? If it’s time to transfer the debt to your child, refinancing is a terrific strategy to move the loan into your child’s name and free yourself of the obligation.
- Ability to cosign a loan transfer — If your child has no credit or bad credit, you can consider transferring the debt to your child with you as the cosigner. Many private lenders offer this transfer option, as well as cosigner release programs. This type of release removes you from the debt obligation after a certain amount of time when your child has improved their credit standing. Once you are released, you no longer have any liability regarding the debt.
Are there any downsides to refinancing a Parent PLUS Loan?
By going with a private lender to refinance your Parent PLUS Loan, you lose some of the basic benefits that are part of the federal program. Private lenders may not offer the same deferment and forbearance options that come with federal student loans. And private lenders don’t have income-driven repayment plans or loan forgiveness programs.
If you can qualify for one of these federal repayment or forgiveness programs, it may be a smarter option than refinancing. Make sure to do your research and decide if losing those federal benefits would work for your situation.
Shop and compare Parent PLUS Loan refinancing options
After you have weighed your options and decided that refinancing is your optimal solution, the next step is to find high-quality, reputable loan companies and see what they have to offer. Purefy has assembled a group of the highest-rated private student loan companies that are here to compete for your business.
Use our Compare Rates tool to quickly see your rate and term options from multiple top lenders.
Our comprehensive tool will help you analyze and compare your refinance offers based on some simple information with no impact to your credit score.
Refinance for tomorrow
With help from you as a parent, your child has received a degree and is primed to take on the world. Now it’s time to consider refinancing options so that you are well positioned for the future.
Whether you want a better interest rate, lower monthly payments, or debt consolidation, compare rates and start saving today.
Complete this simple form and instantly access offers and refinancing possibilities from our highly curated group of private lenders.