Parent PLUS loans have some of the highest rates around with a current rate of 7.6% for parents of undergraduate students in the 2018-2019 academic year. Refinancing these parent loans can save dramatic amounts in interest and help you get out of debt faster. At PenFed, our fixed rates start at 5.10% and our variable rates start at 3.10%. We’re here to help you along the process to make sure you know everything you need to know about refinancing your Parent PLUS loans.
Unlike standard refinancing where a bachelor’s degree or higher is often required, refinancing your parent loans with PenFed does not require a degree. Even so, you are still eligible to get the same great rates as borrowers who have a bachelor’s degree. If you have an advanced degree, you qualify for even lower rates. See your exact rate when you use our rate calculator.
If you have a child ready to take on the responsibility of student loan debt, we have the option to transfer your parent PLUS loans to them. While there is no way to transfer loans directly through the Department of Education, at PenFed we can help you achieve this by having your child directly apply for student loan refinancing. On the application, your child must list all relevant information of the Parent Plus loan in addition to any additional student loans they would like to refinance.
While it isn’t as common, we also have the option for a parent to take sole responsibility of their child’s student loan. If a child can’t qualify with a cosigner, you can apply on your own and list their loans to transfer them to your name.
The only extra document needed to complete the transfer is an affidavit to confirm both parties understand the responsibility of the loan. Make sure you let us know you are transferring and we will include the affidavit in your application documents.
If your child is refinancing their loans and you want to help them without being fully responsible for the loan, you can become a cosigner and use your good credit score and long-established credit history to help your child save on interest costs. Let’s say you have a score of 775 and your child has a score of 700—that could be a potential 0.50% difference in the new interest rate. Becoming a cosigner does make you jointly responsible for the loan so if your child misses a payment, it could impact your credit score.
Parents PLUS loans aren’t eligible for the income-based repayment plans that students can take advantage of. The only federal repayment plan parents can qualify for is the income-contingency repayment which caps the monthly student loan payment at 20% of the borrowers’ discretionary income. You are eligible for forgiveness but it is after 25 years of repayment, which leads us to our next point.
Parents in a very different financial situation than that of their children. With other priorities such as paying off a home and boosting up retirement savings, we understand the need to not have your goals interrupted by student loans. At PenFed, we get you out of debt faster and offer unique loan terms designed to get you out of debt quickly without making your monthly payments unreasonable. Our most popular terms are unique to the market—the 8-year and 12-year terms. These terms can help you get out of debt before you retire and are designed to keep your monthly payments affordable.
If you want to learn more about any of these options for refinancing parent loans, feel free to give us a call!