Refinancing 31 March 2023

Transferring Parent PLUS Loans To Student Via Refinancing

Transferring Parent PLUS loans to the student can be a smart financial move. It helps the student take control of their own finances and may offer long-term savings in time and money. Refinancing is a simple way to make this happen.

Transferring Parent PLUS Loans To A Student Via Refinancing

For parents who are concerned about the amount of debt their child will incur upon graduation, transferring their Parent PLUS Loans to a student via refinancing may be the perfect solution. In this article, we’ll look at how refinancing Parent PLUS loans can help parents save money and transfer their loan debt onto the student’s name while still enjoying the benefits of refinancing. We’ll also discuss the potential risks and rewards of transferring Parent PLUS Loans to a student via refinancing, so you can make an informed decision about whether this strategy is right for your family.

Parent PLUS Loan Transfer via Refinancing

Transferring a Parent PLUS Loan to a student via Refinancing allows parents to get a lower interest rate and better loan terms than traditional Parent PLUS loans. It also enables them to transfer their loan debt onto the student’s name, providing them with some financial relief after graduating. This strategy can help parents save money on their loans while still giving their children the opportunity to pay back less than they would have with a traditional Parent PLUS loan.

Pros & Cons

Understanding the following pros and cons involved in transferring Parent PLUS Loans to a student through refinancing will help you make an informed decision. 


Here are the benefits associated with transferring a Parent PLUS loan to a student via refinancing:

Lower interest rates

Refinancing often allows borrowers to take advantage of lower interest rates as well as more favorable loan terms such as a longer repayment period or reduced fees. This can significantly reduce the cost of repaying the Parent PLUS Loan over time, making it much easier for students to manage their debt.

More flexible repayment options

Refinancing a Parent PLUS Loan can also provide borrowers with more flexible repayment options, such as the ability to make additional payments or change their payment frequency. Doing this can give borrowers more control over how much they pay each month and potentially help them save money in the long run.

Fewer fees

Most refinancing companies don’t charge application or origination fees when transferring a Parent PLUS Loan to a student, which can help save borrowers money. Also, there are a number of refinancing companies that offer additional benefits such as no prepayment penalties and discounts for setting up automatic payments.


The potential drawbacks of transferring a Parent PLUS loan to a student via refinancing include the following:

Loss of benefits & rights associated with federal loans

When a borrower refinances a Parent PLUS Loan, they are no longer eligible for the rights and benefits associated with federal loans. This includes loan forgiveness programs, income-driven repayment plans, and deferment or forbearance options.

Risk of default

If borrowers make late payments or miss payments altogether, they may be at risk of defaulting on their loan. Defaulting can lead to serious financial consequences such as wage garnishment and damage to a borrower’s credit score.

Potentially more expensive

Even though refinancing often allows borrowers to take advantage of lower interest rates, it’s important to consider the total cost of the loan over time. Some lenders may offer lower interest rates but come with additional fees or other conditions that could make refinancing more expensive in the long run. Make sure that you compare multiple lenders and read the fine print before making a decision.

Eligibility Requirements

Now that you’re aware of the pros and cons involved, the next step is to make sure that you’re eligible for the process of transferring a Parent PLUS loan to a student via refinancing. 

To be eligible to transfer a Parent PLUS loan to a student via refinancing, certain criteria must be met. All lenders have different criteria so make sure to research their options before applying for a refinance loan. With this in mind, consider the following eligibility factors:

Credit Score Requirements

In order to successfully transfer a Parent PLUS Loan to a student via refinancing, the borrower must have an excellent credit score. Generally, this means a score of 680 or higher on a FICO or VantageScore scale.

Income Requirements

To qualify for refinancing, borrowers should ideally demonstrate a steady income of at least $35,000 per year. This should be consistent and verified by tax returns or other documentation.

Employment Requirements

In addition to a strong credit score and consistent income, lenders will want to see stable employment for the past two years or more. A letter from the employer verifying the applicant’s current job status and length of employment may be requested.  

How to Transfer Parent PLUS Loan to a Student via Refinancing

In a nutshell, this transfer involves the parent transferring their loan to the student, followed by the student obtaining a new loan.

Here’s an overview of the process:

Choosing a Refinancing Company

Finding a reputable refinance lender is the first step in transferring Parent PLUS loans to a student. It is important to review various lenders and their loan terms, interest rates, and other features before making a decision.

Application Process

The student will need to provide personal information such as name, address, social security number, and more to the chosen lender. The documentation required may vary by lender and it is important to verify what information will be needed before proceeding.

Loan Transfer Process

Once the student has been approved by the refinance lender, they can initiate the loan transfer process. This involves notifying the Parent PLUS lender of the intent to transfer and providing any necessary documents. Once approved, the student can take over the repayment of the loan.


To consolidate:

  • The parent applies for a Direct Consolidation Loan through the Department of Education and selects a loan servicer and repayment plan.
  • The parent transfers their PLUS loan to their student via refinancing.
  • The student obtains a new loan from an approved lender with lower interest rates than what the parent was paying on their PLUS Loan.
  • The student’s new loan should cover both the PLUS Loan and the Direct Consolidation Loan.
  • The student makes a one-time payment to pay off both loans at once.
  • The parent is now no longer responsible for their PLUS Loan and the student has a new loan with lower interest rates.
  • The student will now be responsible for any future payments on the new loan.
  • Both parties should keep documentation of the transfer and refinancing process to ensure everything goes smoothly.

Parent PLUS Loan Transfer Alternatives

Consider any of the following alternatives in the event that transferring a Parent PLUS loan through refinancing isn’t the best fit for your situation.

Loan Forgiveness

Loan forgiveness is a program that provides borrowers with the opportunity to have some or all of their loans forgiven in exchange for performing certain activities, such as working in public service or teaching. This option can be beneficial if the parent has made qualifying payments over several years and still owes a balance on their loan.

Income-Driven Repayment Plans

Income-driven repayment plans are payment programs in which the borrower’s monthly payments are based on their income. These plans can be beneficial for parents whose income is too low to make regular loan payments, as they will typically have lower monthly payments and, in some cases, may even have some of the balance forgiven.

Deferment and Forbearance

Deferment and forbearance are options available to parents who need temporary relief from their loan payments due to financial hardship or other circumstances. During deferment, the borrower can temporarily postpone making payments, while still remaining in good standing on their loan. Forbearance offers similar benefits – the difference is that it requires monthly interest payments during the period when payments are suspended. All in all, both these options can provide parents with a much-needed break from loan payments while they work to improve their financial situation.


Here are some frequently asked questions.

How to convert a Parent PLUS loan to a student?

To convert a Parent PLUS loan to a student, you must refinance the loan with a private lender who offers student loans.

Can Parent PLUS loans be forgiven?

No, Parent PLUS loans are not eligible for forgiveness or cancellation.

How to convert a Parent PLUS loan to a student?

Yes, it is possible to defer repayment of Parent PLUS loans if a) certain criteria are met and b) the borrower is able to demonstrate temporary financial hardship. However, interest will continue to accrue on the loan even during the deferment period. Note that not all lenders may offer this option.

Final Thoughts

Transferring a Parent PLUS Loan to a student through refinancing can be a great way to make loan repayment more manageable and put students in control of their debt. Having said that, families and students need to consider all the factors involved before making this decision, as there are potential risks involved such as affecting one’s credit scores or loan forgiveness options. Nonetheless, it can be a powerful tool for managing debt, and by taking the time to evaluate all aspects, families and students can make an informed financial decision that is right for them.