Refinancing Parent PLUS Loans to a Better Rate Can Mean Big Savings

Kat Tretina

Each year, millions of parents take out federal Parent PLUS Loans to help their children pay for their college education. Unlike other types of federal loans, there are no caps on how much you can borrow with Parent PLUS Loans; you can borrow up to the total cost of attendance at your child’s school.

While helping your kids with their college expenses is a wonderful thing to do, it can cause you to rack up a substantial amount of debt. And with high interest rates, your loan balance can grow over time.

If you’re trying to pay off the loans as quickly as possible, you might be wondering, “Should I refinance Parent PLUS Loans?” Student loan refinancing is a strategy for managing your debt, and it can be a particularly effective method for Parent PLUS Loan borrowers.

Why refinancing makes sense for Parent PLUS Loan borrowers

As of 2020, there are 3.6 million Parent PLUS Loan borrowers with over $100.8 billion in outstanding loans.

Parent PLUS Loans are the most expensive of all federal loans. They have disbursement fees — 4.228% as of October 2020 — but they also have the highest interest rates of all loan types.

The federal government recently slashed student loan interest rates. Parent PLUS Loans disbursed after July 1, 2020 and before July 1, 2021 have an interest rate of 5.75%, a significant reduction from previous years.

However, the new interest rate only applies to current borrowers. If you took out loans before July 1, 2020, you’ll have to pay the higher interest rate you agreed to on your loan promissory note. Depending on when you took out the loan, the rates can be quite high, with some borrowers paying as much as 7.9% interest.

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Loan Disbursement Date Interest Rate
July 1, 2019 – June 30, 2020 7.08%
July 1, 2018 – June 30, 2019 7.6%
July 1, 2017 – June 30, 2018 7%
July 1, 2016 – June 30, 2017 6.31%
July 1, 2015 – June 30, 2016 6.85%
July 1, 2014 – June 30, 2015 7.21%
July 1, 2013 – June 30, 2014 6.41%
July 1, 2006 – June 30, 2013 7.9%

With such high interest rates, student loan refinancing can be an excellent way to handle your debt. If you have good credit, you may qualify for a loan with a lower interest rate, making it easier to repay your loan.

Should I refinance Parent PLUS Loans?

When you refinance your Parent PLUS Loans, you take out a loan from a private lender for the amount of your existing debt. The loan has different terms, including interest rate and monthly payment.

While student loan refinancing has some drawbacks for federal loan borrowers, it can be well worth the tradeoff. You’ll no longer be eligible for an income-driven repayment plan or Public Service Loan Forgiveness, but not everyone qualifies for those programs. And, by refinancing, you can enjoy these potential benefits.

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1. You can save money

The reason that student loan refinancing is so popular is that it can help you save a significant amount of money. With a lower interest rate, less interest will accrue, allowing you to pay less over time. Just how much can you save?

Let’s say you took out $30,000 in Parent PLUS Loans in 2018, giving you an interest rate of 7.6%. If you made the minimum payments for the entire 10-year repayment term at that interest rate, you’d pay $12,921 in interest charges on top of the amount you originally borrowed.

If you refinanced your loans and qualified for a 10-year loan at just 4.75%, you’d pay just $7,745 in interest charges. Taking a few minutes to refinance your Parent PLUS Loans would allow you to save over $5,000.

  Original Loan Refinanced Loan
Loan Term 10 Years 10 Years
Interest Rate 7.6% 4.75%
Minimum Monthly Payment $358 $315
Total Interest $12,921 $7,745
Total Paid $42,921 $37,745
Total Savings: $5,176

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.

2. You can pay off your debt faster

If you’re trying to figure out how to pay off Parent PLUS Loans quickly, refinancing can be a smart solution.

When you refinance and qualify for a lower rate, your monthly payment will likely drop, too. While you can make the lower payment and pay off the loan according to its loan term, a way to accelerate your debt repayment is to continue making the minimum payment you had before you refinanced. Thanks to refinancing to a lower rate, more of your payment will chip away at the loan principal, and you can pay off your loan months or years early.

For example, if you had the above student loans and refinanced and qualified for a 10-year loan at 4.75% interest, your monthly payment would be $315 instead of $358. But if you continued paying the extra $43 per month, you’d pay off your loans in under nine years. And, you’d save an additional $1,208 in interest charges.

3. You can reduce your monthly payment

If you cannot afford your current monthly payments, student loan refinancing can give you some relief. When you refinance, you can decide to extend your repayment term. With a longer term, you’ll pay more in interest charges over time, but you can significantly reduce your minimum monthly payments.

For instance, if you had $30,000 in loans and a 10-year term at 7.6% interest, your minimum monthly payment would be $358. If you refinanced and qualified for a 15-year loan at 7% interest, your monthly payment would be just $270 per month, freeing up $88 each month for your other expenses.

Repaying Parent PLUS Loans more easily

Now that you know how to refinance Parent PLUS Loans and the benefits of refinancing, you can research the best options for you. Use Purefy’s Compare Rates tool to get quotes from top refinancing lenders to help you find the best interest rate and loan terms.

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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 01/01/2023. 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.

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.

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 4.64% APR to 9.19% 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.

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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 6.94% to 11.58% 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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