Refinance Parent PLUS Loans: 5 Best Lenders of 2023

Refinancing Parent PLUS loans can save you money if you get a lower interest rate than you have on your current loan with the federal government. It can also eliminate your responsibility for paying back the loan by transferring it to your child.

While not all private lenders refinance Parent PLUS Loans, many do. To qualify, you’ll need good credit and income. Below you’ll find a list of lenders that allow you to refinance Parent PLUS Loans, as well as answers to questions parent borrowers frequently have when deciding if refinancing makes sense for them.

Here are five student loan refinancing companies to check out. Many of them allow you to check your prospective interest rate before applying.

You can also use credible.com to compare lenders and find the lowest rates for student loan refinancing.

CommonBond

CommonBond allows graduates and parent borrowers to refinance $5,000 to $500,000.

Pros

• Parent transfer to child: You can apply for refinancing or have your child apply and take over responsibility.

• Refinance high loan amounts: You can refinance up to $500 thousand.

• Generous forbearance options: You can pause payments for up to 24 months.

• Soft credit pulls: You can check your eligibility and loan rates without a hard inquiry.

• Cosigner release: Yes.

Cons

• Education restriction: You must have graduated from an eligible Title IV accredited university or graduate program

• Location restriction: CommonBond isn’t available in Mississippi or Nevada.

• Income requirement: 15- and 20-year term loans required a minimum income of $65 thousand.

Check rates with CommonBond

Laurel Road

Laurel Road allows parents and children to refinance at least $5,000 over 5, 7, 10, 15, and 20-year terms.

Pros

• Parent transfer to child: You can apply for refinancing or have your child apply and take over responsibility.

• Soft credit check: You can see if you’ll qualify and your rates without a hard credit inquiry.

Cons

• Education restriction: You must have at least an associate degree for select professions.

• Forbearance limitation: You can’t postpone payments if the borrower returns to school.

• Citizenship requirement: Must be a U.S. citizen or permanent resident.

Check rates with Laurel Road

Earnest

Earnest allows parents and children to refinance at least $5,000 over 5, 7, 10, 15, and 20-year terms.

Pros

• Refinance high loan amounts: You can refinance up to $500 thousand.

• Lower credit score eligibility: You can qualify with a credit score of at least 650.

• Soft credit check: Yes.

Cons

• Skip a payment: Earnest allows you to skip a payment once every 12 months.

• Citizenship requirement: Must be a U.S. citizen or permanent resident.

Check rates with Earnest

SoFi

SoFi allows parents and children to refinance at least $5,000 over 5, 7, 10, and 15-year terms.

Pros

• Parent transfer to child: You can apply for refinancing or have your child apply and take over responsibility.

• Soft credit check: Yes.

Cons

• Cosigner release: No.

• Education restriction: You must have at least an associate degree for select professions.

• Citizenship requirement: Must be a U.S. citizen or permanent resident.

Check rates with SoFi

Education Loan Finance (ELFI)

Education Loan Finance (ELFI) allows parents and children to refinance at least $15,000 over 5, 7, or 10-year terms.

Pros

• No fees: Borrowers won’t pay application fees, origination fees, or prepayment penalties.

• You or the child can refinance: You can apply for the loan in your name or have your child apply and take over the debt.

• Good customer service: Borrowers are assigned a student loan advisor to answer questions.

Cons

• High minimum loan amount: Refinance loans start at $15,000, so it’s not a good fit if you want to refinance a smaller amount.

• Short term limit: You have up to 10 years to pay off the loan.

• Not all loans eligible: The loans you’re refinancing must be a qualified education loan as defined by the IRS.

Check rates with ElFi

Step 1 Check your credit

To qualify for student loan refinancing and get a lower interest rate, you’ll need a credit score at least in the high 600s and a steady income. If not, you might need a cosigner who qualifies.

So before you apply for refinancing, review your credit reports from Equifax, TransUnion, and Experian. That way, you know where you stand, and you can clear up any errors ahead of time.

You can claim a free report from all three credit bureaus once every 12 months at AnnualCreditReport.com.

Step 2 Check rates

The key to getting the best fixed or variable rate loan is to research student loan refinancing lenders. You can search online to compare lenders’ rates, fees, and loan terms. You can even use a site like credible.com to check your options with multiple lenders at once.

As you’re researching, you’ll get an idea of the terms you’re eligible for by going through the prequalification process. While each lender is different, many lenders give you an estimated rate by making a soft credit inquiry, which doesn’t affect your credit score.

To give you a rate estimate, many lenders will ask for:

• the loan balance

• what undergraduate institution your child attended

• whether you or your child earned a bachelor’s degree

• your monthly income

Step 3 Review offers

Hopefully, more than one lender offers you the opportunity to refinance. If so, your next step is to compare the repayment options. Look over the contracts. Decide what type of interest rate you want. Some lenders will offer borrowers with excellent credit variable annual percentage rates starting near 1.2% and fixed interest rates near 2.48%. Loan borrowers with modest credit scores will qualify for loans with higher interest rates.

Also, choose how long you want to take to pay back the loan. Lenders will offer 5, 7, 10, 15, and 20 year-terms. Remember, the longer term you take, the more interest you’ll pay over the life of the loan.

Other loan terms to check:

• when a cosigner can be released

• what happens if you become disabled

• forbearance and deferment options

• job loss protections

• rate discounts

Step 4 Complete your loan application

To complete the refinance application, you’ll typically need

1. Loan or payoff verification statements.

2. Proof of employment (W-2 form, recent pay stubs, tax returns).

3. Proof of residency.

4. Proof of graduation.

5. Government-issued ID.

The lender will perform a hard credit check to lock in your interest rate. If it denies your application, the lender will send you a letter explaining why. Borrowers denied for bad credit may be able to qualify by adding a cosigner.

Step 5 Review final paperwork

If you’re approved, you’ll need to sign the final disclosure statement to accept the loan. Once you sign, a three-day rescission period begins. You can cancel the refinance loan anytime within that window if you change your mind.

Step 6 Wait for the loan payoff

Once the recession period ends, your new lender will contact your loan servicer to payoff the Parent PLUS Loans. From there, you’ll make monthly payments to your new refinance lender.

You’ll want to keep making payments to your existing servicer until you get confirmation that the process is complete. Your previous lender will refund any excess payment.

Keep making payments to your existing lender or servicer until you get confirmation that the process is complete.

The Department of Education doesn’t allow parents to shift federal Parent PLUS Loans into a child’s name. In contrast, more and more private lenders are allowing the student to refinance Parent PLUS Loans into their name, which transfers responsibility for the debt. Even if your child makes payments on your PLUS loan, you’re still ultimately responsible for the debt.

The eligibility requirements and process for your child to refinance Parent PLUS Loans into their name are the same as if they were refinancing their own student loans. That means they’ll need good credit, a lengthy history of making loan payments, and enough income to cover their expenses. If not, they may need a cosigner.

The lenders selected below are based on interest rates, repayment terms, and eligibility requirements.

CommonBond

CommonBond allows graduates and parent borrowers to refinance $5,000 to $500,000.

Pros

• Parent transfer to child: You can apply for refinancing or have your child apply and take over responsibility.

• Refinance high loan amounts: You can refinance up to $500 thousand.

• Generous forbearance options: You can pause payments for up to 24 months.

• Soft credit pulls: You can check your eligibility and loan rates without a hard inquiry.

• Cosigner release: Yes.

Cons

• Education restriction: You must have graduated from an eligible Title IV accredited university or graduate program

• Location restriction: CommonBond isn’t available in Mississippi or Nevada.

• Income requirement: 15- and 20-year term loans required a minimum income of $65 thousand.

Check rates with CommonBond

Laurel Road

Laurel Road allows parents and children to refinance at least $5,000 over 5, 7, 10, 15, and 20-year terms.

Pros

• Parent transfer to child: You can apply for refinancing or have your child apply and take over responsibility.

• Soft credit check: You can see if you’ll qualify and your rates without a hard credit inquiry.

Cons

• Education restriction: You must have at least an associate degree for select professions.

• Forbearance limitation: You can’t postpone payments if the borrower returns to school.

• Citizenship requirement: Must be a U.S. citizen or permanent resident.

Check rates with Laurel Road

SoFi

SoFi allows parents and children to refinance at least $5,000 over 5, 7, 10, and 15-year terms.

Pros

• Parent transfer to child: You can apply for refinancing or have your child apply and take over responsibility.

• Soft credit check: Yes.

Cons

• Cosigner release: No.

• Education restriction: You must have at least an associate degree for select professions.

• Citizenship requirement: Must be a U.S. citizen or permanent resident.

Check rates with SoFi

Education Loan Finance (ELFI)

Education Loan Finance (ELFI) allows parents and children to refinance at least $15,000 over 5, 7, or 10-year terms.

Pros

• No fees: Borrowers won’t pay application fees, origination fees, or prepayment penalties.

• You or the child can refinance: You can apply for the loan in your name or have your child apply and take over the debt.

• Good customer service: Borrowers are assigned a student loan advisor to answer questions.

Cons

• High minimum loan amount: Refinance loans start at $15,000, so it’s not a good fit if you want to refinance a smaller amount.

• Short term limit: You have up to 10 years to pay off the loan.

• Not all loans eligible: The loans you’re refinancing must be a qualified education loan as defined by the IRS.

Check rates with ElFi

You should refinance Parent PLUS Loans if your goal is to pay back the debt quickly. Refinancing makes little sense if you’re nearing retirement and are looking to get a lower payment as your income decreases. It also may not be your best choice if you work full time for the government or a nonprofit and qualify for the Public Service Loan Forgiveness program. You can read more about retirement and Parent PLUS Loans here.

Private lenders will typically want you to have a good credit score (680+) and enough income to cover your living expenses and other debt payments comfortably to get the best repayment terms.

Aside from getting a lower rate, another reason to refinance is to transfer Parent PLUS Loans to your child. Maybe you can’t pay Parent PLUS Loans, but your child can. Or perhaps they agreed to take over responsibility for the loans when they left school. Whatever your reason, your child may be able to refinance parent loans into their name if they have a credit score in the high 600’s, stable income, and a low debt-to-income ratio.

You shouldn’t refinance Parent PLUS Loans if you have bad credit or you don’t want to lose federal benefits.

Most student loan refinancing lenders will deny your application for poor credit. If you have a checkered credit history, it may be a good idea to work on cleaning up your credit report before applying for refinancing. This way, you’ll have an easier time getting approved and qualifying for better interest rates and repayment terms.

Refinancing turns your federal loan into a private student loan, which makes you ineligible for loan benefits offered by the Department of Education. If you work full-time in public service, need a repayment plan based on your income, or want to make sure your loans go away when you die, student loan refinance is not suitable for you. Instead, look into consolidating your loans into a Direct Consolidation Loan. Doing that won’t lower your interest rate, but it will ensure you don’t lose any benefits.

There usually aren’t costs to refinancing Parent PLUS Loans. Many lenders don’t charge origination, application, or disbursement fees for refinancing student loans. But before you apply, ask your lender about its fee structure.

Consider consolidating Parent PLUS Loans if you:

• want a lower monthly payment with the income-contingent repayment plan

• would like all of your federal student loans with the same loan servicer

• want to move your loans to a new servicer

• need to get out of default

• have FFEL Parent PLUS Loans, and you want to qualify for PSLF

You should not consolidate Parent PLUS Loans to lower your interest rate. The fixed-rate for your new loan will be based on the weighted average of the loans included in the consolidation application. (The U.S. Department of Education no longer offers consolidation loans with variable interest rates.) You can get a lower interest rate if you sign up for an autopay discount. Enrolling in autopay will give you a rate reduction of 0.25%.

Look to refinance Parent PLUS Loans to lower your interest rate or transfer the loans to the other parent or child. But check out consolidation if:

• you want to combine several federal student loans into one

• qualify for Parent PLUS Loan forgiveness

• get a lower loan payment

Consolidation has the added benefit of allowing you to maintain eligibility for federal repayment plans and forgiveness programs that you lose with refinancing.

You can consolidate Parent PLUS Loans for free on the Federal Student Aid website.

Follow these steps to consolidate your loans

• Step 1: Log in to studentaid.gov. You’ll need a Federal Student Aid (FSA) ID to log in. Once inside, click “Manage Loans” and then “Consolidate My Loans”.

• Step 2: Choose the loans to consolidate. You can consolidate some or all of your loans. But if you consolidate your student loan debt with the parent loans you borrowed for your child’s education, you will lose eligibility for the REPAYE, PAYE, and IBR plans. If you have an FFEL Consolidation Loan, you can consolidate that loan a second time — even if it’s your only loan. The interest rate for the new loan will be a fixed rate based on the weighted average of the interest rate of the loans included in the application.

• Step 3: Choose a repayment plan. The new loan is eligible for the Income-Contingent Repayment Plan (ICR) and the 10-Year Standard, Extended, and Graduated repayment plans.

• Step 4: Read the disclosures. Check your contact information, loans included in the application, and review the terms in the Master Promissory Note before signing.

• Step 5: Review the Loan Summary Statement. A few weeks after you apply, the loan servicer will send you a statement showing the details of your new Direct Consolidation Loan. Check the letter to see your new loan balance, interest rate, and monthly payment amount.

The higher interest rates and loan amounts make Parent PLUS Loans expensive and a threat to your retirement. For borrowers with good credit scores and savings, refinancing can help make the payments more manageable.

Not everyone will qualify. But even if they did, refinancing a Parent PLUS Loan into a private student loan isn’t always the best choice. More often, consolidation is the right financial choice.

Consolidating a Parent PLUS Loan into a Direct Consolidation makes you eligible for affordable loan repayment plans based on your income and loan forgiveness after 25 years. Both features will allow you to enjoy retirement and stretch your fixed-income without worrying about student loan debt.

Schedule a call if you want help finding the best Parent PLUS Loan repayment options for you and your family.