Refinancing Parent PLUS Loans

Published on Author Bethany SimsLeave a comment

Parent PLUS loans have some of the highest rates around with current rates at 6.31% and 7.21% in the 2014 – 2015 academic year. Refinancing Parent loans can save dramatic amounts in interest cost and help you get out of debt faster. At Purefy, our fixed rates start at 3.50% and our variable rates start at 2.77%. That’s the potential for a lot of savings, here is what you need to know about refinancing your parent PLUS loans.  


No degree requirement for parents

Unlike standard refinancing where a bachelor’s degree or higher is often required, refinancing your parent loans with Purefy doesn’t require a degree and you get the same great rates as borrowers who have a bachelor’s degree. If you have an advanced degree, you qualify for even lower rates. See your exact rate when you use our rate calculator.


Refinancing transfer – parent to child or child to parent  

If you have a child ready to take on the responsibility of the debt, we have the option to transfer your parent PLUS loans. Here’s how: If you want your child to take on the responsibility of the loan, have them apply on their own and list the information for your loans as well as any of their own they are refinancing.

While it isn’t as common, we also have the option for a parent to take sole responsibility of their child’s student loan. If a child can’t qualify with a cosigner, you can apply on your own and list their loans to transfer them to your name.

The only extra document needed to complete the transfer is an affidavit to confirm both parties understand the responsibility of the loan. Make sure you let us know you are transferring and we will include the affidavit in your application documents.

Transferring your loan to your child isn’t an option through the federal program. You have to go through a private lender to be able to take advantage of either of these options.  


Cosigning Options

If you want to help your child out but don’t want to be fully responsible for the loan, you can use your good credit score and long established credit history to help your child save on interest cost. Let’s say you have a score of 775 and your child has a score of 700 – that could mean an 0.50% difference in the interest rate – all without costing you a cent. Becoming a cosigner does make you jointly responsible for the loan. If your child misses a payment, that would impact your credit score.

Parents PLUS loans aren’t eligible for the income-based repayment plans that students can take advantage of. The only federal repayment plan parents can qualify for is the income-contingency repayment which caps the monthly student loan payment at 20% of the borrowers’ discretionary income. You are eligible for forgiveness but it is after 25 years of repayment, which leads us to our next point.


Out of debt faster

Parents are in a different financial situation in life than 20 and 30 somethings. Parents have other priorities such as paying off the house and boosting the final years of retirement savings. These priorities are interrupted by student loans – not something anyone should worry about so far after college. At Purefy, getting you out of debt faster is one of our goals and we offer unique loan terms designed to get out of debt quickly without making your monthly payments unreasonable. Our most popular terms are unique to the market – the 8 and 12 year term. These terms get you out of debt before you retire and are designed to keep your monthly payments reasonable and even can lower your monthly payment depending on your current loan term.

If you want to learn more about any of these options for refinancing your parent loans, give us a call.

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