How to Refinance Parent PLUS Loans in 2020

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How to Refinance Parent PLUS Loans in 2020

It is no secret that getting an education in the U.S. is expensive. Student debt is a growing problem in America. It currently exceeds $1.5 trillion, according to the Chamber of Commerce. However, not only are students facing this problem, but also parent PLUS loan borrowers are struggling to pay off their debt.

Currently, the fixed APR for parent PLUS loans is 7.21%, which represents a significant amount when it comes to loans that are often more than $30,000.

Now, is there any way to lower that interest rate so you can save some money in the long run?

Well, the best way to lower your interest rate is to refinance your Parent PLUS loans.

What Does It Mean to Refinance Parent PLUS Loans?

Refinancing a parent PLUS loan is no different from refinancing student loans. Currently, there are more than 3.4 million parents who hold Parent PLUS loans in the U.S. and they owe more than 90 billion dollars.

These types of loans are taken out by people who wish to provide their children with the opportunity to get a degree. Often, taking out a Parent PLUS loan becomes the only option available to get an education, even if it comes with a fixed interest rate of 7.21%

Here is when loan refinancing comes in handy. When you refinance a Parent PLUS loan, you turn to a private lender who will pay off your existing loan in exchange for a new one with new terms.

Is It Worth It to Refinance Parent PLUS Loans?

The main disadvantage of turning to a private lender to refinance a student loan is that you lose benefits only federal loans offer you, such as the Public Loan Forgiveness Program or the Income-Based Repayment Plan.

Now, you must know that Parent PLUS loans are not eligible for these special programs. This means that refinancing your parent PLUS loan can bring more advantages than disadvantages.

Advantages of Refinancing Your Parent PLUS Loan

Being eligible for refinancing might not be so simple. However, since parents tend to have a longer and more solid credit history, eligibility requirements tend to be easier to meet. By refinancing your Parent PLUS loan, you may receive these benefits:

  • Lower interest rates.
  • Flexibility to choose payment terms.
  • The possibility to adjust your loan terms to your life circumstances.
  • Unemployment protection.
  • No application, origination, or prepayment fees.
  • Loan consolidation.

Note: Benefits may vary depending on the lender

Best Lenders to Refinance Parent PLUS Loans

This list takes into account different aspects such as APR, flexibility, and benefits. These lenders have the best reputation when it comes to refinancing Parent PLUS loans.

1. Earnest

Earnest

Loan types: Graduate, undergraduate, MBA, refinance parent PLUS loans

Terms: 5 to 15 years

Loan amounts: + $5.000

Rating: A+

Minimum credit score: 650

Fees: No fees

Unemployment Protection: Yes

Earnest is a lender that started operating in 2013 and has refinanced more than 50,000 loans. They offer several benefits to parents who took out parent PLUS loans and are looking to get a lower APR.

The company is known for not working with third parties and having their own customer success team ready to help you at any time. Also, they give you the chance to change your loan terms if you are going through special circumstances in your life.

To be eligible, you must have a graduate student – or be expecting graduation- within the following six months. Also, you must be employed and be either a U.S. citizen or a permanent resident.

2. Laurel Road

Laurel Road parent plus loans

Loan types: Graduate, undergraduate, MBA, refinance Parent PLUS loans

Terms: 5 to 20 years

Loan amounts: + $5.000

Rating: A+

Minimum credit score: 660

Fees: No fees

Unemployment Protection: No

Laurel Road is an online lender created by KeyBank in 2013. The firm offers competitive interest rates to refinance Parent PLUS loans so you can get the most out of it.

Laurel Road offers refinancing and consolidation services for parent PLUS loans for undergraduate and graduate students. A requirement to refinance Parent PLUS loans is that the degree holder is currently working, this way parents can refinance in their name or in their child’s name.

The company does not charge origination or prepayment fees; however, they don’t disclose if they charge application fees.

Laurel Road also offers a 0.25% APR reduction for automated payments via ACH.

3. SoFi

sofi parent plus loans

Loan types: Graduate, undergraduate, MBA, refinance Parent PLUS loans

Loan amounts: + $5.000

Terms: 5 to 20 years

Rating: A+

Minimum credit score: Not disclosed

Fees: No fees

Unemployment Protection: Yes

SoFi is a lender created in 2011. It started out as a regular student loan lender and it then decided to offer Parent PLUS loan refinancing services.

The company offers refinancing and consolidation services of both private and federal student loans. To be eligible, you must be a graduate student from an eligible program.

SoFi does not charge any prepayment or origination fees. They also offer unemployment protection, which means you can pause your payment while you transition from a job to another.

In addition, SoFi offers career support, which is a coaching service dedicated to SoFi members.

Another benefit is that the company has entrepreneur programs that allows eligible applicants to get loan deferrals and mentorship.

4. College Ave

college ave

Loan types: Graduate, undergraduate, MBA, refinance Parent PLUS loans

Terms: 5 to 20 years

Rating: A+

Minimum credit score: Not disclosed

Fees: No fees

Unemployment Protection: No

College Ave is a lender that offers a wide variety of refinancing options and loan terms.

College Ave offers you quite flexible terms for you to pay your loan. You can choose how many years you need to pay your loan back in the range of 5 to 20 years.

Another benefit College Ave offers you is the lack of prepayment penalties or origination fees. You can apply and get a credit decision within a few minutes.

Should I Refinance My Parent PLUS Loan?

There are many advantages when it comes to refinancing your Parent PLUS loan. Some lenders give you benefits such as unemployment protection, low-interest rates, and flexible paying terms. Therefore, turning to a private lender can be beneficial for your pocket in the short and long term.

Unlike regular student loans or personal loans, Parent PLUS loans are not eligible for special federal loan forgiveness programs, which means you wouldn’t be losing any benefits if you decide to refinance your parent PLUS loan.

Getting a better deal for your Parent PLUS loan is a matter of comparing different benefits and choosing the lender that best suits your needs.

This way, you can save a considerable amount of money in the long run, not to mention lower monthly payments that will allow you to use your salary in a more efficient way.

In short, refinancing your Parent PLUS loans may bring more advantages than disadvantages in the short and long term.

Good Luck!