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Best Parent PLUS Loan Refinance Options of 2022

Brenda Williams

Refinancing parent PLUS loans can save you money by lowering your interest rate, and you can choose to maintain the loan in your own name or transfer the debt to your child. We’ve evaluated the best refinancing options based on rates, terms, process, fees, and overall quality.

No application, origination, or prepayment fees

640

Min. Credit Score

2.49% - 11.72%

Variable APR

2.59% - 8.49%

Fixed APR

Overview

Splash Financial partners with various banks and lenders to offer a competitive interest rate.

What we like

  • Quick online application process
  • Competitive interest rates
  • Easily compare lenders
  • Personalized customer support

What we don't

  • Terms and conditions differ by lenders
  • No options for deferment

Easy online application process

660

Min. Credit Score

2.81% - 7.21%

Variable APR

3.99% - 10.68%

Fixed APR

Overview

LendKey streamlined the digital application process to save you time and effort by comparing competitive rates from a smaller bank or credit union.

What we like

  • Competitive rates from smaller institutions
  • Streamlined application and repayment process
  • Longer forbearance periods
  • Cosigners are not required

What we don't

  • No full in-school deferment
  • Only a credit-based application available

Competitve rates with credit union membership

660

Min. Credit Score

N/A

Variable APR

3.30% - 7.15%

Fixed APR

Overview

First Tech Federal Credit Union provides competitive rates, but you'll require a membership to receive those benefits. To become a member, you'll have to meet some strict requirements.

What we like

  • Low refinancing rates
  • Flexible loan terms
  • Payment protection with DebtSafe
  • No application and orgination fees

What we don't

  • No temporary forberance option
  • No co-signer release
  • Parent PLUS loans can't be refinanced
  • Credit union membership required

Temporary forbearance available

650

Min. Credit Score

2.06% - 14.04%

Variable APR

3.47% - 13.05%

Fixed APR

Overview

SoFi provides an easy online application process, so you can receive a rate estimate in minutes without a hard credit check.

What we like

  • No prepayment fees, no origination fees, no late fees
  • Flexible repayment options
  • Exclusive membership perks
  • Borrow up to the total cost of attendance
  • Unemployment protection

What we don't

  • No borrowing below $5,000
  • Application process can take 4 - 6 weeks

UNDERGRADUATE LOANS: Fixed rates from 3.47% to 12.55% annual percentage rate ("APR") (with autopay), variable rates from 2.26% to 13.54 % APR (with autopay). GRADUATE LOANS: Fixed rates from 4.60% to 12.55% APR (with autopay), variable rates from 2.96% to 13.54% APR (with autopay). PARENT LOANS: Fixed rates from 4.48% to 13.05% APR (with autopay), variable rates from 2.06% to 14.04% APR (with autopay). 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. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. 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. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 06/08/2022.

Can you refinance parent PLUS loans? 

Yes, loan borrowers can refinance Parent PLUS Loans through private lenders. This allows borrowers to secure better terms than those offered by the federal government, such as lower interest rates and flexible repayment periods. Private lenders offer longer repayment terms than the standard ten years offered by the federal government.

You can also consolidate multiple loans into one loan for more convenient payments.

Should you refinance parent PLUS loans?

Is refinancing the right choice for you? Let’s explain the pros and cons of refinancing parent PLUS loans and how it works.

Pros:

  • Lower monthly payments: A lower interest rate will also mean lower monthly payments, which can help if you’re struggling to keep up with your current payments.
  • Flexible repayment options: If you are having trouble paying back your parent PLUS loan, refinancing could give you more flexible repayment options. You can lock in a longer term and lower monthly payments but your overall loan will cost more.
  • Transfer the loan to your child: You can transfer the debt obligation to your child, so they will be on the hook for the loan. This will also help with your credit score and your child if he or she continues to make monthly payments on time.

Cons:

  • Lose federal protections and benefits: When you refinance your parent PLUS loans, you’ll no longer qualify for certain federal protections and benefits, such as deferment and forbearance options. However, you can consolidate your loan and still enjoy the benefits.

How much could you save when refinancing Parent PLUS Loans?

You could save hundreds or thousands of dollars when refinancing a Parent PLUS Loan. Here is an example:

  • Loan amount: $50,000
  • Months remaining: 120
  • Interest rate: 5%
  • Monthly payment: $506
  • Lifetime costs: $60,747

Based on the above scenario, if you refinance at a 3% rate, your monthly payments will drop to $483 and your lifetime cost will drop to $57,936.50. In this case, you’ll save $23 a month and roughly $2,810 over the life of the loan.

How to refinance parent PLUS loans

Here are some steps to take when you consider refinancing your loan:

  • Estimate how much you could save: An essential part of choosing a lender is estimating how much you could save with a lower interest rate and smaller monthly payment.
  • Gather Documentation: You will need to gather documentation showing you’re a parent, not a student. You will also need information about your income and credit history.
  • Submit an Application: Once you have gathered all the required documentation, it’s time to submit your application. You can do this in two ways: online or through the mail. The online option is convenient because it allows borrowers to complete their application in one sitting and submit it electronically. However, both methods require the same information and follow the same steps. If you choose the mailing option, be sure to allow enough time for delivery before applying for your loan.

How and when to consolidate parent PLUS loans?

You can consolidate your loan as early as six months after the first disbursement.

Parent PLUS loan consolidation does not affect your eligibility for future federal student aid. If anything, consolidating your loan can help simplify your repayment plan by combining multiple loans into one monthly payment plan.

The process of consolidating your parent PLUS loan is going through the Department of Education. Your interest rate will not likely go lower, but you can change payment terms.

Suppose you don’t qualify for a consolidation loan due to a high debt-to-income ratio or another factor. In that case, you can still refinance your parent PLUS loan by refinancing them into an alternative private loan product.

To wrap it up, when you consolidate, you will do it through the Department of Education and maintain your federal benefits. When you refinance, you’ll do it through a private lender and lose federal benefits, but you’ll save money if you have a lower interest rate.

How to choose the best parent PLUS loan refinancing option

If you’re a parent who took out a PLUS loan, you have many options to refinance it. But how do you choose the best one? Here are some tips:

  • Don’t fall for lenders’ promises: Lenders will tell you they have the lowest rates and fees. They don’t tell you about their fees. Some lenders will make it seem they have lower rates than other companies, but when you add in their fees and calculate the total cost of borrowing, their rates are higher. Be sure to check the fine print.
  • Save money on interest: The key question is whether or not refinancing makes sense financially. If your current rate is higher than the market average, it makes sense to shop around for better terms and save money on interest payments.
  • Shop around to find the lowest rates: You can get quotes online from multiple lenders in minutes. Compare rates and fees and determine whether your credit history will affect your ability to borrow. The more creditworthy you are, the better your chances of getting a good deal.
  • Fixed or variable rate: If interest rates are rising quickly and you’re likely to keep your current job for several years, consider having your parent PLUS loan balance re-amortized at a fixed rate rather than a variable rate. This will ensure that the interest rate on your loan doesn’t increase unexpectedly after you’ve refinanced it once.