Transferring Parent PLUS Loans to Student Through Refinancing

If you took out federal Parent PLUS Loans, you might wonder if it’s possible to transfer those loans into your child’s name once they’re finished with school.

Unfortunately, there’s no way to transfer a PLUS Loan directly to your child — but you might be able to refinance the loans in your child’s name with certain lenders.

Should you refinance your Parent PLUS Loan in your child’s name?

Refinancing a Parent PLUS Loan in a student’s name could be a good choice in some cases, but it isn’t right for everyone.

If you’re thinking about refinancing your student loan, here are a few pros and cons to keep in mind:

Pros

• No longer responsible for the loan: Because the loan will be in your child’s name, you’ll no longer be responsible for making payments. This could help lessen the strain of payments on your budget.
• Could help student build their credit: Your child’s credit could benefit from having the loan in their name — for example, by making on-time payments.
• Might get a better interest rate: PLUS Loans come with higher interest rates compared to other federal loans. Depending on their credit, your child might qualify for a lower interest rate through refinancing — which could save them money on interest and even help them pay off the student loan faster.

Learn More: When to Refinance Student Loans

Cons

• Loss of federal benefits: While you can refinance both federal and private loans, refinancing a federal student loan — such as a Parent PLUS Loan — will cost you access to federal benefits and protections. For example, you’ll no longer be eligible for income-driven repayment plans or student loan forgiveness programs.
• Might be hard for student to qualify: Borrowers typically need good to excellent credit to qualify for refinancing — a good credit score is usually considered to be 700 or higher. If your child has poor or no credit, it could be difficult for them to get approved.
• Lack of repayment options: Private refinanced loans don’t offer the variety of repayment options that federal student loans do — such as income-driven or extended repayment plans.

Check Out: Private Student Loan Forgiveness Alternatives

Lenders that refinance Parent PLUS Loans

If you decide to refinance your Parent PLUS Loans, it’s important to consider as many lenders as possible first. This way, you and your student can find the right loan for your situation.

Here are Credible’s partner lenders that allow Parent PLUS Loans to be refinanced into a student’s name:

Learn More: How Often Can You Refinance Student Loans?

How to refinance Parent PLUS loans in the student’s name

If you’re ready to refinance Parent PLUs Loans into your child’s name, follow these four steps:

1. Research and compare lenders. Be sure to shop around and compare as many student loan refinance companies as you can to find the right loan for you. Consider not only interest rates but also repayment terms, any fees charged by the lender, and eligibility requirements.
2. Pick a loan option. After you’ve done your research, choose the loan option that best suits the needs of you and your child.
3. Complete the application. Once you’ve picked a lender, you and your child will need to fill out a full application and submit any required documentation, such as tax returns or pay stubs.
4. Manage payments. If your child is approved, keep in mind that it could take one or two billing cycles for the refinance to be processed. While you’re waiting, continue making payments on your PLUS Loan. Afterward, the student could consider signing up for autopay so they won’t miss any payments in the future — many lenders offer a rate discount to borrowers who opt for automatic payments.

Depending on their credit, your child might qualify for a lower interest rate on a private refinanced loan. This could save them money on interest charges and even help them pay off the loan more quickly.

You can use our calculator below to see how much you might save by refinancing your student loans.

Check Out: Student Loan Repayment Calculator: Estimate Your Payoff Date

How to refinance in the parent’s name

If refinancing into your child’s name doesn’t suit your needs, you could refinance the PLUS Loan while keeping it in your name. While you’ll still be responsible for the loan, you might save money on interest if you can get a lower interest rate through refinancing.

Or you could opt to extend your repayment term to reduce your monthly payments and lessen the strain on your budget. Just keep in mind that this means you’ll pay more in interest over time.

What if my child isn’t ready to qualify for a student loan refinance?

If your child hasn’t had a chance to build a solid credit history yet, it might be difficult for them to qualify for refinancing on their own. Here are a few options to consider in this situation:

Your child could help make payments

Even if the loan isn’t in your child’s name, they can still make payments on the loan. This could be a good way for them to get in the habit of paying the loan each month if they end up taking over the loan in the future.

In the meantime, they can work to build their credit so they can qualify for refinancing later — for example, by making on-time payments on all of their bills, paying down credit card balances, or becoming an authorized user on the credit card account of someone they trust.

Check Out: How Long It Takes to Pay Off Student Loans

You could cosign the loan

If your child is struggling to get approved for refinancing, you could consider cosigning the loan. Having you as a cosigner might even qualify them for a lower interest than they’d get on their own.

While this means you’ll continue sharing responsibility for the loan, keep in mind that several lenders offer a cosigner release option — to be eligible for cosigner release, your child will typically need to make consecutive, on-time payments for a specific period of time as well as meet the underwriting criteria on their own.

If you decide to refinance your Parent PLUS Loans, remember to consider as many lenders as possible to find the right loan for your needs.

Credible makes this easy: You can compare your prequalified rates from multiple lenders in two minutes — without affecting your credit score.

Keep Reading: Private Student Loan Consolidation