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How to Save Money on Parent PLUS Loan Debt

Ben Luthi

Helping a child out by paying for college can be an important goal for many parents, but if you don’t have enough income or savings to do it, you may end up turning to Parent PLUS Loans to get the funding you need.

But once you start making payments, Parent PLUS Loans can be a little overwhelming. If you can, consider refinancing them to save money and potentially even pay off what you owe early.

How refinancing Parent PLUS Loans can save you money

Parent PLUS Loans are the most expensive loans offered by the U.S. Department of Education, which means you can expect a higher monthly payment and more interest charges than your child would have if they were to apply for undergraduate student loans.

If you already have the loans, though, refinancing may be the best way to save money. This is primarily because many private lenders offer lower interest rates than the federal government provides.

If your credit score is in excellent shape and you have a relatively high income, you have a good chance of getting approved for better terms than what you currently have.

For example, let’s say you took out $10,000 in loans during the 2019-20 school year when the Parent PLUS Loan interest rate was 7.08%. With the Standard Repayment Plan of 10 years, your monthly payment for those loans would be $117, and you’d pay $3,983 in interest over your repayment schedule.

However, if you managed to refinance the loans with a private lender at 4% with the same repayment term, your monthly payment and total interest charges would drop to $101 and $1,833, respectively.

Those savings over 10 years may not seem like a lot, but it’s better to have the money in your pocket than your loan servicer’s. Plus, the more debt you have, the greater the savings potential.

So if you’re wondering how to pay off Parent PLUS Loans with as little cash outlay as possible, refinancing is one of the best options available.

Did you know? Parent PLUS Loans often have the highest rate of any federal loan.

Over the past 5 years, Parent PLUS Loans have had an average rate of 6.7% — but refinance rates currently start at a historic low 1.88%.

Takes 2 minutes • No impact on credit

Why refinance rates are currently at historic lows

The coronavirus pandemic has hammered the U.S. economy, and in response, the Federal Reserve cut its federal funds interest rate to near zero in March. This is the rate that banks charge each other to lend money overnight to maintain cash reserves.

In turn, banks use the savings from the lower rate to reduce interest rates on their loans. That includes student loans, auto loans, personal loans, credit cards and more.

The federal funds rate has never been this low, which means that student loan refinancing interest rates have also fallen to historic lows.

In other words, if you’re thinking about refinancing your Parent PLUS Loans at some point, now may be the best time to pull the trigger.

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How to refinance Parent PLUS Loans

Refinancing any type of loan can seem daunting, especially if you haven’t had a lot of experience in the past. If you’re wondering how to refinance Parent PLUS Loans, here are the steps you can take:

  1. Gather information about your loans: When you apply to refinance, you’ll need to provide information about your existing loans, including the amounts and your current loan servicer.
  2. Shop around: The best way to find the lowest interest rate possible is to shop around and compare offers from multiple lenders. Private student loan companies typically allow you to get prequalified on their websites before you apply, but this process can take a while if you’re going through it with each individual lender. To save time, use the Purefy rate comparison tool, which allows you to view loan offers from multiple lenders in one place.
  3. Compare offers: Once you have some offers to compare, take a look at more than just the interest rates. You’ll also want to consider repayment terms and other features each lender provides to its customers. In some cases, it may make sense to opt for a shorter or longer repayment term, depending on your budget.
  4. Submit your application: Once you’ve decided on a lender, you can click through the Compare Rates tool to fill out an application directly with the financial institution. You’ll likely need to provide some documentation to prove your income, and the lender will run a hard credit inquiry to determine your creditworthiness. If you’re approved, you’ll be able to view the final offer from the lender and choose whether or not to accept it. If you accept, the lender will pay off the loan directly on your behalf.

Refinancing Parent PLUS Loans is one of the easiest ways to save money!

If you’re looking to save on high-interest Parent PLUS Loans, refinancing can be the fastest and simplest strategy to secure a lower rate.

Takes 2 minutes • No impact on credit

One thing to keep in mind in all this is that refinancing Parent PLUS Loans with a private lender will cause you to lose access to certain benefits. For example, Parent PLUS Loan borrowers can take advantage of the Income-Contingent Repayment Plan, which can reduce your monthly payment to a fraction of your discretionary income.

Also, some private lenders may not offer as generous terms with deferment and forbearance as the federal government. You also won’t qualify for student loan forgiveness programs.

If you don’t need any of those, however, you can proceed with refinancing without concern.

Should I refinance Parent PLUS Loans?

In your quest to learn how to pay off Parent PLUS Loans and save money along the way, refinancing your debt may have the biggest positive impact of anything you can try. Before you apply, though, make sure you won’t need any benefits the Department of Education provides, and shop around to find out if the loan offers are better than what you have now.

See How Much You Can Save

Parent PLUS Loan Refinance Calculator

View Details


Parent PLUS Loan rates are often the highest of any federal student loan. Calculate your savings with lower rate and see the impact of paying off PLUS loans faster.

Step 1: Enter Current Loan Information

Loan Balance
Your remaining student loan debt to be repaid.
Interest Rate
The amount that the lender charges in interest, expressed as a percentage.
Current Monthly Payment
The total amount of your monthly student loan bill.
Add Multiple Loans to Calculate

Step 2: Enter New Loan Information

New Interest Rate
Your updated interest rate after refinancing student loans.
The length of time you have to repay your student loan debt in full.

Add Multiple Loans

Insert additional loan

Step 3: See How Much You Can Save


Lifetime Interest


New Monthly



Current Loan New Loan Savings
Rate 6.7% 4.2% 2.5%
Lifetime Interest $37,520 $22,210 $15,310
Monthly Payment $1,146 $1,018 $128

Like what you see? Check your actual prequalified rates from the industry’s top lenders in just 2 minutes or less.

Then consider what your goals are. As previously mentioned, you can choose a shorter or longer repayment term than what you have now. A shorter term will result in higher payments but will allow you to pay off the debt faster.

In contrast, a longer term will reduce your monthly payments to make them more affordable but will result in more total interest costs.

Regardless of whether you choose to refinance and how you plan it, the important thing is that you take proactive steps to address your debt. Now that you know how to refinance Parent PLUS Loans and the pros and cons of doing so, you’ll be in a better position to make the best choice for you.

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ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 12/01/2022. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.64% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.24% APR to 8.54% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 3.94% to 8.48% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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