The Complete Guide To Pay Off Parent PLUS Loans

The Complete Guide ToPay Off Parent PLUS Loans

If you have Parent PLUS Loans, or your parent’s have Parent PLUS Loans, here is everything you need to know about how to pay off Parent PLUS Loans. Parent PLUS Loans are federal student loans that you can borrow from the federal government to help pay for a dependent’s education. It’s essential to know all your options to pay off Parent PLUS Loans.

In this complete guide to pay off Parent PLUS Loans, you will learn:

Compare The Best Refinance Parent PLUS Loans For 2020

Lender
APR
Minimum Credit
2.26% – 5.94%
650

Overview

KeyValue
Variable Rates:2.26% – 5.94%
Fixed Rates:2.99% – 5.94%
Minimum Credit Score:Good or Excellent
Minimum Income:None

Details

KeyValue
Eligible Loans:Private & Federal
Minimum Loan Amount:$5,000 ($10,000 in CA)
Loan Terms:5, 7, 10, 15, 20 years
Borrower Residency:All States
Hardship Deferment:Yes
Co-signer Option:Yes

1.99% – 5.49%
650

Overview

KeyValue
Variable Rates:1.99% – 5.34%
Fixed Rates:2.98% – 5.49%
Minimum Credit Score:650
Minimum Income:None

Details

KeyValue
Eligible Loans:Private & Federal
Minimum Loan Amount:$5,000
Loan Terms:5 – 20 years
Borrower Residency:All States except KY or NV
Hardship Deferment:Yes
Co-signer Option:Yes

2.39% – 6.01%
680

Overview

KeyValue
Variable Rates:2.39% – 6.01%
Fixed Rates:2.79% – 5.99%
Minimum Credit Score:680
Minimum Income:$35,000

Details

KeyValue
Eligible Loans:Private & Federal
Minimum Loan Amount:$15,000
Loan Terms:5, 7, 10 years
Borrower Residency:All States
Hardship Deferment:Yes
Co-signer Option:Yes
1.89% – 6.66%
660

Overview

KeyValue
Variable Rates:1.89% – 6.66%
Fixed Rates:2.63% – 6.63%
Minimum Credit Score:660
Minimum Income:None

Details

KeyValue
Eligible Loans:Private & Federal
Minimum Loan Amount:$5,000
Loan Terms:5 – 20 years
Borrower Residency:All States
Hardship Deferment:Varies
Co-signer Option:Yes

1.89% – 6.00%
700

Overview

KeyValue
Variable Rates:1.89% – 5.90%
Fixed Rates:2.80% – 6.00%
Minimum Credit Score:700
Minimum Income:None

Details

KeyValue
Eligible Loans:Private & Federal
Minimum Loan Amount:$5,000
Loan Terms:5, 7, 10, 15, 20 years
Borrower Residency:All States
Hardship Deferment:Yes
Co-signer Option:Yes

Checking Your Rate Doesn’t Affect Your Credit Score
Disclosures: Earnest | ElFi | Laurel Road | SoFi | Splash

How To Refinance Parent PLUS Loans

Can you refinance Parent PLUS Loans? The answer is yes. Parent PLUS Loans typically have high interest rates, which can interfere with your retirement savings and become a financial burden. You can refinance Parent PLUS Loans to save money, lower your interest rate and pay off debt more quickly. There are two ways to refinance Parent PLUS Loans:

  • Refinance Parent PLUS Loans in your name only
  • Refinance Parent PLUS Loans in your child’s name

Refinance Parent PLUS Loans in your name only​

Refinancing Parent PLUS Loans in your name only is the standard way that borrowers refinance Parent PLUS Loans. When you refinance Parent PLUS Loans, the process is similar to how to refinance student loans. To qualify for Parent PLUS Loan refinancing, you will need good credit, stable and recurring monthly income, and a low debt-to-income ratio. Lenders want to ensure that you can afford your monthly living expenses, plus debt payments for mortgages, student loans and credit cards. When you refinance Parent PLUS Loans, a private lender pays off your existing Parent PLUS Loans, which means you no longer will have the benefits of a federal government loan.

The process to refinance Parent PLUS Loans is simple. You can compare Parent PLUS Loans refinance lenders and then check your new interest rate for free in about two minutes with no impact to your credit score. Then, you can apply online in about 10-15 minutes.

Refinance Parent PLUS Loans in your child’s name​

Can a Parent PLUS Loan be transferred to the student?Many Parent PLUS Loans borrowers ask whether they can transfer Parent PLUS Loans to their child. The short answer is no, you can’t directly transfer Parent PLUS Loans to a child. However, you can refinance Parent PLUS Loans in your child’s name with certain private lenders. To qualify, the student must qualify for student loan refinancing. That means your child must have good credit (at least 650 or higher), stable and recurring income, and a low debt-to-income ratio. Lenders want to ensure that your child can repay student loans, pay for living expenses, and pay other debt obligations such as credit card debt or a mortgage.

How To Consolidate Parent PLUS Loans

Many parents ask: Should I consolidate my Parent PLUS Loans? When you consolidate Parent PLUS Loans, you combine your existing Parent PLUS Loans into a single, Direct Consolidation Loan. You can even consolidate a single Parent PLUS Loan too. Parent PLUS Loan consolidation helps you to organize your existing Parent PLUS Loans into a single loan. When you consolidate Parent PLUS Loans, the repayment period is 10-30 years. While a longer repayment schedule may lower your monthly payment, you may pay more in total interest since interest accrues on your Parent PLUS Loan balance. The interest rate for a Direct Consolidation Loan is equal to a weighted average of your existing Parent PLUS Loans, rounded up to the nearest 1/8%. Therefore, Parent PLUS Loan consolidation doesn’t lower your interest rate.

How To Lower Your Parent PLUS Loan Payments

An income-driven repayment plan is one option tolower your Parent PLUS Loan payments. Income-driven repayment plans are federal repayment plans that cap your student loan payment at a percentage of your monthly income. Parent PLUS Loans are only eligible for Income-Contingent Repayment (ICR), which is one type of income-driven repayment plan.

Income-Contingent Repayment (ICR) lowers your monthly payment to the lesser of:

  • 20% of your discretionary income; and
  • The amount you would pay on a fixed, 12-year repayment schedule

You should only choose an Income-Contingent Repayment (ICR) plan if you are unable to afford the Standard Repayment Plan, which is 10 years. To qualify for ICR, first you must consolidate your Parent PLUS Loans to a Direct Consolidation Loan. You also may be liable for income taxes if you receive any loan forgiveness.

How To Get Parent PLUS Loan Forgiveness

Many parent borrowers ask: Are Parent PLUS Loans eligible for forgiveness? Other parents ask: How can I get my Parent PLUS Loan forgiven?

If you want to know how to get Parent PLUS Loan forgiveness, the best way is through the Public Service Loan Forgiveness program. The Public Service Loan Forgiveness program is a federal program that offers student loan forgiveness to employees who work for the government or a non-profit and make 120 monthly payments. To get Parent PLUS Loan forgiveness, the employment of the parent borrower is what matters; not your child’s employment.

It is important to understand all the requirements of the Public Service Loan Forgiveness program. Also, to qualify for public service loan forgiveness, you must first consolidate your Parent PLUS Loans into a Direct Consolidation Loan. Then, you must make a majority of your loan payments while enrolled in an income-driven repayment plan such as Income-Contingent Repayment (ICR).

Parent PLUS Loans: Important Questions

What is the best way to pay off Parent PLUS Loans?

The best way to pay off Parent PLUS Loans depends on your personal circumstances and financial situation. The Standard Repayment Plan takes 10 years to pay off Parent PLUS Loans and is the most straightforward.

If you want to lower the interest rate on your Parent PLUS Loans, then Parent PLUS Loan refinancing is your best strategy. You can lower your interest rate, save money and pay off Parent PLUS Loans faster.

If you are struggling to pay off your Parent PLUS Loan, then you consider an income-driven repayment plan such as Income-Contingent Repayment (ICR). While you can lower your monthly payment, this strategy may be more expensive because interest still accrues on your Parent PLUS Loan.

Can you pay off Parent PLUS Loans early?

Yes, you can pay off Parent PLUS Loans early. Parent PLUS Loans are federal student loans, which can be paid off any time with no prepayment penalty.You may choose to pay off Parent PLUS Loans early, or you may decide to use those funds to save more for retirement.

Can Parent PLUS Loans be forgiven?

Parent PLUS Loans can be forgiven. The best way to get Parent PLUS Loan forgiveness is through the Public Service Loan Forgiveness program. You can receive Parent PLUS Loan forgiveness if you meet all requirements, including 120 monthly payments, and work for an eligible employer.

Do you have to pay back Parent PLUS Loans?

Parent PLUS Loan repayment begins immediately. The good news is that you are able to apply for student loan deferment while your child is enrolled in school and for six months after graduation. That’s why it is important to have a Parent PLUS Loan repayment strategy in place so that you understand all your options.

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