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Why Many Parents Are Refinancing Their Student Loans

Ben Luthi
Reasons to Refinance Student Loans With Your Spouse
Reasons to Refinance Student Loans With Your Spouse

Before You Read, Lower Your Student Loan Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.
Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

Before You Read, Lower Your Student Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.

Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

Student loan debt can be crippling for college graduates, but it can be an absolute nightmare for parents who borrowed money on behalf of their student children.

Parents owe $89 billion in Parent PLUS Loans, and that’s not including money borrowed from private lenders. With retirement on the horizon and rising healthcare costs, parents may be looking for any solution possible to eliminate their student loans more quickly.

Refinancing Parent PLUS Loans or private loans can provide parents with several benefits, but there are also some potential downsides to consider. Here’s what you should know.

What does it mean to refinance Parent PLUS Loans or private loans?

Refinancing Parent PLUS Loans involves replacing one or more existing federal loans with a private student loan, and the process is the same for private student loans.

It’s important to note, however, that to refinance Parent PLUS Loans is not the same as Parent PLUS Loan Consolidation. With consolidation, you’re replacing a federal loan with another federal loan through the U.S. Department of Education.

If you’re thinking about private loan or Parent PLUS Loan refinance options, there are some potential drawbacks to consider.

For starters, refinancing federal loans with a private lender will cause you to lose access to certain benefits, such as the income-contingent repayment plan and loan forgiveness programs. You may also not get the same deferment and forbearance options that the government provides.

As a result, it’s essential to consider both the pros and cons of refinancing and consolidation before making a decision.

Why parents are looking into private and Parent PLUS Loan refinance options

Whether you’re looking to pay down your debt faster, get some relief on your monthly payments, or execute a private or Parent PLUS Loan transfer to your student child, here are some reasons you might want to consider refinancing.

Reduce your interest rate

If your credit score has improved since you first applied for parent loans, refinancing may help lower your rate. Or if you have federal loans, which all carry the same interest rate regardless of credit history, you may be able to qualify for a lower rate even if your credit hasn’t changed.

A lower interest rate will not only save you on total interest charges but can also lower your monthly payment.

That said, there’s no guarantee that you’ll get a lower interest rate. Private lenders will consider your credit score and history, income, other debts and more to determine what rate to offer you.

The 2 Best Companies to Refinance Student Loans

Our Top-Rated Picks for 2022 Offer Low Rates and No Fees

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No Maximum Loan Amount

Fixed Rate

5.48% – 8.94% APR 4

Variable Rate

5.28% – 8.99% APR 4
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Precision Pricing — Pick Your Monthly Payment

Fixed Rate

5.19% – 9.74% APR 2

Variable Rate

5.72% – 9.74% APR 2

Drop your monthly payment

If you’re having a hard time affording your monthly payment, refinancing to a longer repayment term could lower it enough to be affordable.

Just keep in mind that if you have federal loans, Parent PLUS Loan Consolidation can give you access to the income-contingent repayment plan, which reduces your payment based on your income. If your income is very low relative to your student debt balance, this may be a viable option.

It’s important to note that if you extend your repayment term, you will end up paying more in interest. So consider it only if you’re struggling to get by with your current payment.

Transfer Parent PLUS Loan to student

If you’re looking to have your child take over the debt you incurred on their behalf, it is possible to refinance Parent PLUS Loans or private loans into their name.

If you haven’t talked to your child about this possibility, consider it, especially if your student loan payments are making it difficult to save for retirement or other important goals. It may not make things easier on your student, but if time is running out for you, it may be necessary.

One potential obstacle is that your child’s credit will need to be in good enough shape to qualify for the new loan. If it’s not, you may be stuck with the debt until they’re eligible to take over.

If your student has debt, you could also transfer it to a new loan with your name on it instead of theirs. Before you commit, consider all the potential consequences of doing so.

Get better service

If you have federal loans, you didn’t get to choose the company that services your loan. Depending on your experience so far, a Parent PLUS Loan refinance could allow you to choose a lender that can provide better service while you pay down your debt.

If you have private student loans, you did get to choose who you’re working with. But if the level of service hasn’t met your expectations, moving the debt to a different lender could make a big difference.

Simplify your monthly payment

If you have more than one student loan from different lenders or servicers, making multiple payments every month can get complicated. The last thing you want is to accidentally miss a payment because you’re overwhelmed.

By refinancing your private or Parent PLUS Loans, you can combine all your monthly payments into one, making your repayment plan a little easier to manage.

Shop around to find the best refinance rates

If you’re thinking of refinancing Parent PLUS Loans or private student loans, avoid jumping on the first offer you see. The more lenders you compare, the better your chances will be of scoring favorable terms.

To help, Purefy’s rate comparison tool allows you to view rates and terms from multiple refinance lenders in one place. Simply share a little bit of information about yourself and your debt, and the tool will provide some rate quotes. You don’t even need to undergo a credit check.

As you compare lender offers, look at more than just the rates. Visit each lender’s website and read about potential benefits they offer to borrowers, such as interest rate discounts, deferment and forbearance options, unemployment protection and more. Taking a slightly higher interest rate may be worth it if certain features give you more peace of mind.

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Ascent Rate Disclosure

Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentStudentLoans.com/Ts&Cs.

Rates are effective as of 12/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized back account each month. For Ascent rates and repayment examples please visit: www.AscentStudentLoans.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions. Click here for details.

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 5.09% 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.

ISL Rate Disclosure

Earnest Rate Disclosure

2 Earnest Rate Disclosure:


Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.44% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.97% APR to 9.99% 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.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

Earnest Rate Disclosure

Rates displayed include the 0.25% Auto Pay discount. You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.67% APR to 16.15% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.64% APR to 16.45% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination 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. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. 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. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Responsible borrowing tip: Explore all scholarship, grant and federal options before applying for a private loan.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

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 10/13/2023. 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.

ELFI Rate Disclosure

Education Loan Finance is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 12/11/2023. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.

College Ave Rate Disclosure

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
Minimum loan amount $1,000, as certified by your school and less any other financial aid you might receive.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

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