Parent PLUS Loans & Refinance PLUS Loans
Updated – Jan 9th 2020
So what is a Parent PLUS loan?
Parent PLUS loans are student loans taken out by a parent to help a child or grand child afford the cost of college attendance. Often, these type of loans will allow a parent or guardian to borrow the total amount or cost for the student’s college education. we are going dialogue on the topic of Parent PLUS Loans & Refinance PLUS Loans and what you can do about them.
Unfortunately, these Parent PLUS loans can come with a fairly high cost. Most Interest rates for Parent PLUS loans are very high, because of this more borrowers become more drawn toward refinancing the Parent PLUS loan at some point. Currently, Parent PLUS loans are 6.31% for loans disbursed on or after 7/1/16 and before 7/1/17.
However, there is light at the end of the tunnel, there are multiple options for refinancing Parent PLUS loans.
Let’s go ahead and take a look at a few of these options for borrowers seeking to refinance their Parent PLUS loans.
1. Consolidating Parent PLUS loans
The consolidating of your Parent PLUS loans can provide some great benefits. With that being said, the consolidating of your parent plus loans can also bring limitations to other benefits and you could lose out of benefits as well.
Consolidating a Parent PLUS loan can limit your repayment options. Borrowers that consolidate their Parent PLUS loans are ineligible for income driven repayment plans, these plans include (income based, income contingent, pay as you earn, and revised pay as you earn)
However exceptions can exist, for example: if a borrower has other federal student loans such as subsidized or unsubsidized stafford loans and they consolidate those loans together with their Parent PLUS loan, then the new loan will become eligible for income driven repayment options.
The loss of these repayment options can become a regret in the future if you at some point run into a financial hardship of some sort.
Borrowers that consolidate their Parent PLUS however are eligible for repayment plans such as the standard, graduated and extended graduated repayment plans.
Generally, these repayment plans are for 10 or 15 years in terms of repayment time period.
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2. Refinancing Parent PLUS loans
You may be a parent that is already comfortable with the monthly and interest terms you have on your parent PLUS loan right now but, better conditions can always be obtained
The refinancing of a parent plus loan is usually done with a private lender or bank. Borrowers looking toward the refinancing option usually are seeking to get their student loan interest rates lowered.
Just as with parent plus loan consolidation, a credit check will be conducted.
The advantage of a parent refinance the loan instead of the student is that a parent usually has more employment history as well as credit history. Because of this a parent will be eligible for better and more attractive interest rates. Over time with a lower interest rate a parent borrower can save a great deal on interest paid.
For borrowers that don’t mind more or less losing most of their federal student loan rights and benefits, they would certainly benefit from looking into how to refinance Parent PLUS loans.
Still, be mindful that some of these federal rights and benefits include alternative repayment terms, forbearance, deferment and student loan forgiveness programs.
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3. Parent Refinance to the Student
Currently a small number of banks and lenders are allowing the child or student to refinance the Parent PLUS loan in their name.
Basically in this option the student completes an application to apply for a private loan. What makes it work is that a student can get approved for a lower interest rate on the private loan. Then use that money to pay off the Parent PLUS loan with its much higher interest rate.
However, credit is a factor with this method. A borrower will need to have good credit and a steady salary.
Generally, online lenders are the best to use with this option. Online lenders will allow the borrower to choose a payment that fits their budget. As well as, choose how long they would like the payment term to be. Usually terms are three to seven years.
The best part about this method is that the parent becomes completely free of the financial obligation of paying back the parent plus loan debt. Is the refinance of Student loans for parents for you?
Is the refinance of Student loans for parents the right option you?
Maybe, if you are not sure if Parent PLUS loan consolidation or refinancing Parent PLUS loans is right for you. Then, think about checking out all of your options. You just may be able to save more money on interest. Or, retain a lower monthly payment by making the decision to refinance Parent PLUS loans.
But i think we call can agree that less money on student student loans can mean more money for traveling, investments or retirement goals.
More available money to payoff other lingering credit hindering debts is always a plus. Refinancing your Parent PLUS loans maybe just the thing you need. now that you understand the Parent PLUS Loans & Refinance PLUS Loans process.