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A parent PLUS loan can be a useful tool for helping your child pay for college, but it can also be tough to pay back. This federal loan for parents currently comes with a 7.08% interest rate — and your rate might be even higher if you borrowed a few years ago. Fortunately, it is possible to refinance a parent loan for a lower rate. If you’re a parent borrower, read on to learn how to refinance parent PLUS loans for better rates.
- How to refinance parent PLUS loans
- Make sure refinancing is right for you
- Check your rates with 3-5 lenders
- Gather your documentation and apply
- Keep paying your parent PLUS loan in the meantime
How to refinance parent PLUS loans
The first step in learning how to refinance parent PLUS loans involves doing a little research. More specifically, you need to review the pros and cons of refinancing to make sure it’s the right move for you.
1. Make sure refinancing is right for you
Before submitting any parent PLUS loan refinance applications, it’s essential to figure out whether refinancing will benefit you. For qualifying borrowers, refinancing can have the following perks:
- Lower your interest rate, thereby saving you hundreds or even thousands of dollars on your debt.
- Refinance the parent PLUS loan in the student’s name. If the student can qualify for refinancing on their own, you could transfer ownership of the debt to them.
- Choose new repayment terms, typically between five or 20 years.
- Adjust your monthly payment, whether you want to pay more to get out of debt faster or need to lower your payment for some relief.
- Get a new loan servicer, which might be a welcome change if you’d had issues with your old one.
But refinancing parent PLUS loans isn’t always a good idea, because it can also come with the following downsides:
- Lose access to federal repayment plans and protections. Refinancing a parent PLUS loan turns it private, meaning you can no longer get on plans such as Income-Contingent Repayment.
- Make your loan ineligible for federal loan forgiveness. Again, refinancing your PLUS loan makes it private and thus ineligible for programs like Public Service Loan Forgiveness.
- Have a tough time qualifying. Lenders want to see good credit and a steady income, so not everyone is going to qualify.
If you want to retain access to federal plans and protections, it’s probably best not to refinance your parent PLUS loan right now. But if you don’t need to keep your loan federal and are eager to save money, read on to learn how to refinance your parent PLUS loan.
2. Check your rates with 3-5 lenders
If you’ve decided refinancing is the right move, your next step is to check your rates with three to five lenders. Since each lender sets its own criteria, your offer could vary from one to another. That’s why it’s a good idea to shop around for the best rate.
The best refinancing lenders make it easy to check your rates with an instant online pre-qualification. This rate quote won’t impact your credit at all, and it lets you see whether you “pre-qualify” for offers.
You can check your rates with online lenders such as SoFi, CommonBond, and Earnest, for instance. Refinancing marketplaces like LendKey and Credible also make it easy to check your rates with multiple lenders at the same time.
3. Gather your documentation and apply
Once you’ve shopped around for the best rates, your next step is to choose an offer and apply. This application will be a little more extensive, as it will ask for your personal information, as well as loan statements and proof of employment, such as pay stubs or an offer letter.
You can typically apply online and will get an answer from the lender in a few days. You can also call the lender’s customer service line if you have any questions or need help along the way.
Most refinancing providers are able to process your application and get your new loan up and running in a matter of weeks. If refinancing is the right move for you, the sooner you apply, the sooner you could start saving on interest.
Note that checking your rates and applying for refinancing is free. You should never have to pay to refinance student loans, and the best lenders don’t charge an application or origination.
4. Keep paying your parent PLUS loan in the meantime
Even if your refinancing application has been approved, you need to keep paying your parent PLUS loan until you’re 100% certain everything has been finalized.
You wouldn’t want to accidentally miss payments and fall behind before your refinanced loan is ready. Once it is, your parent PLUS loan account should show a balance of $0.
Then, you (or your child, if you’re transferring the parent PLUS loan to them) can set up repayment with your new loan servicer (you’ll likely need to set up a new account with a username and password).
If you can swing it, set up autopay on your loans so you never miss a payment. Some lenders also offer a 0.25% discount on your interest rate for choosing autopay.
Knowing how to refinance parent PLUS loans can come in handy if you’re looking to lower your interest rate and save money on your debt. And if rates drop, note that you can always refinance for a second or third time to get even greater savings.
Want better rates? Here are the best banks to refinance student loans:
| Variable rates start at... | Fixed rates start at... | Repayment terms | Welcome bonus | Check your rates | |
|---|---|---|---|---|---|
 | 4.54% | 4.49% | 5 - 20 years | $200 | Visit LendKey |
 | 4.99% | 4.47% | 5 - 20 years | $200 | Visit Earnest |
 | 4.22% | 3.97% | 5, 7, 10, 15, and 20 years | $120 | Visit Laurel Road |
 | 4.53% | 4.40% | 5 - 20 years | $100 or $200, depending on the amount you refinance | Visit Credible |
 | 5.09% | 4.74% | 5, 7, 10, 15, and 20 years | $100 | Visit SoFi |
 | 4.53% | 4.83% | 5, 7, 10, 15, and 20 years | $100 | Visit ELFI |
