A Parent PLUS loan is a type of federal student loan. What sets it apart from other federal student loans is that students themselves cannot apply for this loan. Parent PLUS loans are only available to parents of students enrolled at least half-time in an eligible program. These additional funds can help bridge the gap when a student’s financial aid package falls short of the total cost of attendance.
Here’s what you should know about Parent PLUS loan debt and how refinancing can help.
With the higher interest rates, the addition of origination fees, and interest accrual from day one, Parent PLUS loans can be a very expensive option. If your credit score is high and you’re earning a high income, you may qualify for a private student loan at a much lower rate. Besides, private student loans don’t have origination fees, adding to your savings.
Refinancing is the best way to exchange your high-interest Parent PLUS loan for a lower-interest student loan. However, you will need to have good credit and a high income to benefit from the lower rate.
If you’re looking to get rid of your debt, you can also refinance in your child’s name. Your child would then take on responsibility for repaying the loan. In this case, your child will have to meet the lender’s refinance requirements. Lenders will only approve the loan transfer if your child has a high credit score and is earning enough income to afford the monthly payments.
Refinancing in your child’s name benefits both parties. You benefit from becoming debt-free so you can focus on your own financial goals or retirement plans. Your child benefits from getting a head start on building their credit score by making timely payments on the refinanced loan.
We hoped you enjoyed this article! Remember, you canand potentially lower your monthly student loan payments and save money.