Did you know that you can refinance Parent PLUS loans? For parents who took out loans to help their children go to college, this can be an easy way for qualified borrowers to reduce their interest rate and pay off their loans sooner.
First, what is student loan refinancing? Refinancing allows you to take out a loan from a private lender that covers the cost of your current debt. The new loan is completely different from your old ones — with a new repayment term, interest rate, and monthly payment. And, if you had multiple student loans before, refinancing gives you just one loan and one monthly payment going forward.
By refinancing your Parent PLUS loans, you can:
- Qualify for a lower interest rate — ultimately saving you money on interest costs over the life of your new refinanced loan
- Shorten your repayment term — with a lower interest rate — to pay off your debt more quickly
- Lengthen your repayment term — also with a lower interest rate — to have a smaller, more management monthly payment
- Merge all your loans into one new loan — giving you just one monthly payment to worry about
Compare Student Loan Refinance Rates with No Credit Check
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Parent PLUS loan refinance interest rates, lenders, terms, and eligibility
or Permanent Resident
living in an eligible state
|2.98% – 5.79% APR2||1.99% – 5.64% APR2||5-20 years||No minimum||Min: $5,000|
|U.S. Citizen||4.20% – 5.53% APR4||2.86% – 4.98% APR4||5, 8, 12, or 15 years||$42,000|
($25,000 with a
or Permanent Resident
|3.25% – 7.78% APR3||Not offered||5, 7, 10, 15, or 20 years||No minimum||Min: $5,000|
or Permanent Resident
|3.74% – 8.99% APR1||3.64% – 8.99% APR1||5-20 years1||$65,000||Min: $10,000|
(depends on degree type)1
Parent PLUS loan refinance companies and options
- Extremely flexible terms–pick any term of your choosing between 5 and 20 years
- Applicants must be the borrower or cosigner on the loan(s) being refinanced
- Extremely flexible terms–pick any term of your choosing between 5 and 20 years
- High maximum loan limit of $500,000
- Applicants must currently reside in the District of Columbia or one of the 48 states Earnest lends in (all but Kentucky and Nevada).
- Earnest is not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX.
- The debt must be from your eligible dependent’s education, and the degree must be complete (or will be completed by the end of this semester)
- The debt is from paying for a Title IV-Accredited School
- Earnest does not have a cosigner option
Iowa Student Loan
- Loans are available nationwide — not just to Iowans
- Borrowers with an associates degree or no degree are eligible to refinance
- Armed forces interest reduction – qualifying active duty service members get 0.00% interest for up to 24 months
- Offers graduated repayment plans that begin with lower payments that increase gradually during the life of the loan
- Loan forgiveness if the borrower dies or becomes totally and permanently disabled
- Only offers fixed rate loans
- Spouse couples can combine loans into once refinance loan
- Student loans can be transferred from a parent’s name to the child’s, or vice versa
- Borrowers become a member of the credit union
- Cosigner release available after just 12 consecutive on-time payments (not eligible for couple loans)
- No formal forbearance policy – forbearance is considered on a case by case basis should the borrower encounter a financial hardship
Parent PLUS loan refinance basics
Refinancing your Parent PLUS loans and lowering your current interest rate can be a very big deal for your finances — especially when considering Parent PLUS Loans typically have the highest interest rate of any federal student loan. Your student loan balance can quickly balloon with such a high rate, making refinancing Parent PLUS Loans a smart financial decision for many families.
To get started with refinancing, use Purefy’s rate comparison tool . You’ll quickly and easily compare your actual student loan options from a tightly vetted list of refinance companies — all with one simple form.
All our lenders have sterling reputations and offer loans with no origination fees or prepayment penalties. The rate comparison tool will show your rate and monthly payment options with absolute transparency, allowing you to make an informed decision that meets your financial needs.
Some of our lenders also allow parents to transfer their Parent PLUS and private student loans into their child’s name — which can be a great way to help your children take charge of their education and start building up a credit history.
Top reasons to refinance Parent PLUS loans
All Parent PLUS loans get the same high, fixed interest rate regardless of your credit score. This rate is set every year by the federal government. For example, the rate for the 2018-2019 school year was 7.60%.
If you choose to refinance with a new provider and have good credit, you may find that you qualify for a substantially lower interest rate on multiple student loan options — saving you a large sum of money in the process of paying off your new loan.
Reduce Your Monthly Payment
Struggling to afford your current monthly payment? Refinancing can help with that, too.
When you refinance, you get a chance to choose a new loan repayment term and can opt for a longer term that reduces your payment each month. This flexibility lets you dial in your monthly payment exactly how you want it, so you can be more comfortable with the rest of your financial responsibilities.
For example, if you had $30,000 in student loans at 7.08% interest and a 10-year repayment term, your minimum monthly payment would be $350.
If you refinance your loans, keep your same interest rate, but extend your repayment term to 15 years, your payment would drop to only $271 per month. Refinancing would free up an extra $79 in your monthly budget.
Extending your repayment term can cause you to pay more in interest over time, but it may be worth it to get some extra breathing room each month to help with other necessary expenses.
Get One Simple Payment
Refinancing also serves as a Parent PLUS loan consolidation. If you have multiple loans (federal or private) they are all combined into one easy-to-manage loan, with just one monthly payment to your new provider.
Parent PLUS loan consolidation vs Refinancing Parent PLUS loans
While refinancing can be a powerful tool for managing your Parent PLUS loans, there are some drawbacks to consider.
When you refinance Parent PLUS loans, you lose federal student loan benefits such as:
- Deferment or Forbearance
- Income-Driven Repayment Plans
- Public Service Loan Forgiveness Program
If these federal benefits are important to you, an alternative option to refinancing is consolidating Parent PLUS loans with the federal government through a Direct Consolidation Loan.
This program consolidates all your federal loans, and the new rate is based on the weighted average of your current loans. So, although you’ll only have one loan and monthly payment to manage, there’s little chance you will save money on interest costs compared to the savings possible through refinancing.
It’s also worth noting that federal Parent PLUS loan consolidation does not let you combine your federal loans with your private student loans. For that, you would need to refinance.
What to expect when you apply
If you decide to refinance Parent PLUS Loans, use Purefy’s rate comparison tool first to view offers from multiple lenders at once, with just one simple form, and find your best rate.
To be eligible for Parent PLUS Loan refinancing, you’ll need to meet the following criteria:
- Have a strong credit history
- Have at least one outstanding education loan
- Have steady income
Qualified borrowers may be offered significantly better rates and terms than they currently have on their Parent PLUS Loans, based on their creditworthiness including credit score, income, debt-to-income ratio, and other factors. If you have bad credit, you may be able to qualify by adding a creditworthy cosigner to your application.
Once you have decided on your lender of choice for your Parent PLUS loan refinance, you will be taken to that lender’s application, which can generally be completed in less than 15 minutes.
You’ve gone through enough loan application processes to know what to expect, but one tip is to have your current loan statements handy when applying — the lender will want to know the details.
If you are preapproved, you will need to submit documents to verify the information on your application including:
- Loan statements
- Other possible documentation, depending on the lender’s guidelines
All in all, the process is usually a bit more rigorous than something like an auto loan. To offer such low rates on unsecured loans (loans with no collateral), the lender’s underwriters must do their due diligence.
How to pay off Parent PLUS loans quickly
Have good credit? By refinancing your Parent PLUS loans — which have a high standardized interest rate — you can qualify for a much lower rate to save a lot of money on interest costs.
This can help you pay off your debt faster, too. If you’re saving money through a lower interest rate, you can put the extra cash toward additional prepayments, to pay off your loan more quickly — while maintaining the safety net of the same 10-year repayment term in case other expenses take priority.
Let’s say you had $30,000 in Parent PLUS Loans at 7.08% interest and a 10-year repayment term. Over the course of your repayment, you’d pay a total of $41,948.
However, if you refinanced your loans and qualified for a 10-year loan at 5% interest, you’d repay just $38,184.
By just refinancing your debt, you’d save over $3,700 in extra funds that can be used to increase your monthly payments and get rid of your debt sooner.
|Original Loan at|
|Refinanced Loan at|
|Repayment Term||10 years||10 years|
|Total Interest Paid||$11,948||$8,184|
An alternative option is to simply refinance your Parent PLUS loans to a shorter total repayment term, coupled with your reduced interest rate. Shorter repayment terms also typically come with even lower rates, as an added bonus.
This method will set you up for faster repayment success. You’ll have a higher must-pay monthly payment, but also a much smaller total debt thanks to your lower rate — allowing you to ultimately pay less while putting you on course to shed your debt in less than 10 years.
Refinancing Parent PLUS loans to child
An excellent benefit of refinancing Parent PLUS loans is the ability to refinance them from your name to your child’s.
If you took out Parent PLUS Loans to help your child pay for school, those loans are entirely in your name which can be a serious burden. That means you’re solely responsible for repaying them, and with high interest rates, the loans can be expensive and difficult to repay. Plus, having them on your credit report can affect your ability to qualify for other forms of loans, such as a mortgage.
If your child is doing well in their career and is earning enough money to take over the loans, you may be able to transfer the loans into their name through student loan refinancing.
By using this strategy, your child will then be responsible for the loan, and you would no longer be obligated to repay the debt — allowing you to focus on your other financial goals.
If your child has bad credit and doesn’t qualify on their own, you may also consider cosigning on a refinance loan with them. Some lenders, like PenFed Credit Union, offer both parent plus transfer capabilities as well as a cosigner release program, which could remove you from the loan after a certain period of time, after your child’s credit has improved.
How to choose the best Parent PLUS loan refinance option
Ready to easily find your top refinancing option?
Using our rate comparison tool, you can quickly tell which lenders are offering the best rate that is tailored to your financial profile — no teaser rates or “bait and switch” with Purefy.
You can use our sortable chart to see your best rates, and by entering your current loan details, you can compare monthly payments at the various term lengths on offer — whether you’re looking for a shorter or longer repayment term.
If you’re currently dealing with Parent PLUS Loans and a high interest rate, student loan refinancing can be a useful strategy to help you save money, reduce your monthly payment, or even to transfer them to your child.
We also have a team of personal loan advisors who are available to help you through the process. If you have any questions, you can contact us by phone at 202.524.1115 or by email at [email protected].
1College Ave Rate Disclosure:
College Ave Student Loans products are made available through either Firstrust 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. College Ave Refi Education loans are not currently available to residents of Maine. The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. This informational repayment example uses typical loan terms for a refi borrower with a Full Principal Á Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. 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 8/1/2020. Variable interest rates may increase after consummation.
2Earnest Rate Disclosure:
Earnest’s fixed rate loan rates range from 2.98% APR (with autopay) to 5.79% APR (with autopay). Variable rate loan rates range from 1.99% APR (with autopay) to 5.64% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 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% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin to the one 0.31% and 4.96% to the one month LIBOR. The rate will not increase more than once per month LIBOR. Earnest rate ranges are current as of 8/12/2020 and are subject to change based on market conditions and borrower eligibility.
3Iowa 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 3.25% to 7.78% 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.
4PenFed Rate Disclosure:
Fixed Rate Loan Terms: 5 years/60 monthly payments, 8 years/96 monthly payments, 12 years/144 monthly payments or 15 years/180 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed rates range from 4.20% to 5.53% APR [low to high range]. Variable rates range from 2.86% to 4.98% APR [low to high range]. Rates are subject to change without notice. Fixed APR: Fixed rates will not change during the term. This rate is expressed as an APR. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan. Variable APR: Variable rates are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2020, the one-month LIBOR rate is 0.17%. Variable interest rates range from 2.86% to 4.98% (2.86% to 4.98% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate on the student refinance loan is 9.00% for 5-year and 8-year terms, and 10.00% for 12-year and 15-year terms. The floor rate is 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
At Purefy, we do our best to keep all information, including rates, as up to date as possible. Keep in mind that each private student loan refinancing lender has different eligibility criteria. Your actual rate, payment and savings may be different based on credit history, actual interest rate(s), loan amount, and term, including your co-signer [if applicable]. If applying with a co-signer, lenders typically use the higher credit score between the borrower and the co-signer for approval purposes. All loans are subject to credit approval by the lender.
Purefy’s comparison platform is not offered or endorsed by any college or university. Purefy is not affiliated with and does not endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the private sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Purefy reserves the right to modify or discontinue products and benefits at any time without notice.