Best Companies to Refinance Parent Plus Loans this Year

Parents take advantage of Parent PLUS loans, a type of federal loan to pay for their children’s education. Any parent can apply for this loan and they can use it for various educational purposes including tuition, room and boarding or textbooks.

Can you refinance Parent PLUS loans?

You can refinance your Parent PLUS loan with one of the many lenders offering refinancing services. Refinancing a Parent PLUS loan involves taking out a new loan and paying off the original loan with it. This creates a brand-new loan that may come with more favorable terms, such as a lower interest rate or longer repayment period.

Following are the main steps to refinance a Parent PLUS loan.

1. Research and Compare Lenders: The first step is to research different lenders, and compare eligibility, rates, and repayment options to get the best deals. You can use the prequalification assessments offered by most lenders that can help you compare and get the best offer.
2. Assess if Refinancing your Parent PLUS Loan is Worthwhile: Calculate your potential savings to see if refinancing is worth your while. Check how much you will have to pay up in total with the current rates and terms and compare it against the new terms you are potentially getting through refinancing. You can use our student loan calculator below to get an estimate for different rates and terms.
3. Check Requirements and Gather Documents: Once you have chosen to refinance your loan with a specific company, check the information it requires along with the supporting documents that you will need to provide.
4. Apply for Refinancing: Once you have chosen the lender, you can apply for refinancing. You will need to submit financial documents and employment verifications. Check for eligibility criteria and keep all documents ready before applying.
5. Accept the New Loan: If your application is approved, the lender will offer you a new loan with its terms. You can either negotiate, accept or reject. If you accept a new agreement will be signed.
6. Make Payments: You can set up automatic payments to get a discount with some lenders or make sure to stay on top of your payments by keeping them in your calendar reminders.

Pros of Refinancing:

• Lower Interest Rate: Refinancing can help in lowering the interest rate, reducing your monthly payments
• Longer Repayment Period: You can choose a longer repayment period, allowing you to spread out payments over more months or years
• Flexible Repayment Options: Some lenders allow borrowers to choose between fixed-rate and variable rate for the loan term.
• Consolidate Loans: If you have multiple Parent PLUS loans, refinancing can help you consolidate them into one loan with a single payment making it easier to keep track of payments.
• Improve Credit Score: Paying off your loan on time and in full can improve your credit score, making it easier for you to qualify for future loans.

Cons of Refinancing:

• Closing Costs: Some lenders may charge closing costs when refinancing a Parent PLUS loan, so review all the details of your loan agreement before signing.
• Higher Interest Rate: In some cases, the interest rate after refinancing may be higher than what you were paying previously, increasing your monthly payments and total loan cost.
• Prepayment Penalties: Some lenders charge a penalty if you want to pay off your loan early or make larger payments than expected. Make sure to ask about any prepayment penalties before refinancing.
• Credit Check: Refinancing requires a hard credit check, which could lower your credit score temporarily.

In case you are not able to get your Parent PLUS Loan refinanced, there are other alternatives you can try to pay off the loan easily.

1. Consolidation: With consolidation, you can bring all your federal loans under one new loan with a single monthly payment. It doesn’t usually give you a lower interest rate but can extend the loan term which can help reduce the monthly payments and make them more manageable. However, bear in mind that the total cost of a loan may increase this way. Federal loan consolidation does not require a credit check either.
2. Income-Based Repayment: With federal loans, you can opt for an income-based repayment plan where your monthly payments will be a part of your income depending on your family size and earnings. This is another way to help make payments manageable. Moreover, under the federal income-based repayment plan, you can also become eligible for loan forgiveness after 20 years.
3. Extended Repayment: You can increase your repayment period up to 25 years. An extended repayment would mean a longer term and lower monthly payments. You will also have more time to pay off your loan.
4. Grants: You or your child may be eligible for government grants. You can check your financial aid offer that you got after applying for FAFSA. You may be eligible for some grants that you can use to pay off some of the loan and reduce your overall burden. Unlike loans, grants do not have to be paid off.
5. Scholarships: There are various scholarships available to students that can help them get some extra money to pay off some of the loan installments. Your child can apply for the ones they are eligible for to help with the loan repayment.
6. Get Your Child on Board: Other ways your child can help you pay off the loan you took for them is by taking on a part-time job on the side that can help contribute towards loan payment and make the process easier.