PLUS loans or student loans borrowed by parents directly to support their undergraduate children can be tough to repay especially due to the high fees and interest rates involved. However, refinancing of student loans can ease the repayment burden once the child graduates. As a parent, you can choose to refinance these federal loans in your name or still your child can choose to take responsibility and refinance the loan in his or her name after graduating. Your child will, however, need to be financially secure if they are to take up the refinancing. It would be cheaper and better if you as the parent refinanced the loan early enough as this will help reduce the accumulating interest rates and related fees.
How to refinance Parent PLUS student loans
Normally, the Congress is responsible for deciding the interest rates chargeable on PLUS loans. The rates are normally higher compared to other federal student loans. You can, however, pay off your loan at a lower rate if you refinance it with a private lender. As a parent, your credit score will play a major role in determining the interest rate you pay with refinancing lenders. This means that parents who’ve had long employment periods and had credit histories will qualify for reduced rates and thus can save more money in the process.
Transferring parent PLUS loans to the child
The transfer of PLUS loans from the parents to their children does not happen officially but after graduating, the grads can contribute towards the repayment by either logging into the parent’s loan provider’s portal and make the repayment. On the other hand, your child can give the monthly repayment amounts to you, the borrower, if they are financially secure. However, the debt remains under your name as a parent.
Many refinancing lenders have been allowing graduates to refinance the Parents PLUS student loans and in most cases this is done when the child applies for a fresh, refinanced loan. Normally, the lender pays off any remaining balance from the previous loan and instead replaces that balance with a private loan. Under this arrangement, your child will include your PLUS loan under the new bundle and repay it back alongside the new loan.
Parent PLUS student loan refinancing requirements
You will need a credit score of 600 and above if you are to refinance the PLUS loans. A solid employment history is also required and an annual income of $24,000 in most cases. Such a profile works favorably towards getting a lower interest rate for graduates. However, a child can have his/her parent as a co-signer and this can also help them quality for lower interest rates for the refinanced loan.
However, as a parent, you can apply for forbearance, deferment, or flexible repayment plans if you lose your job, or experience some financial hardships. Click here to refinance a Parent PLUS Student Loan.…