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  • Writer's pictureNathan Zarcaro

Top Private Lenders That Will Refinance Parent PLUS Loans

Updated: Dec 20, 2023


Nationwide, 3.6 million Americans hold over $103.6 billion in Parent PLUS loan debt.


In fact, the average borrower now holds about $28,778 in outstanding debt, according to NerdWallet.


And the situation continues to get worse. Parent PLUS loans carry higher interest rates than other federal undergraduate loan types, and they offer far fewer repayment options for borrowers that cannot afford the monthly payments. Luckily, you may be able to save money by refinancing them with a private lender.



This article will explore:



What are Parent PLUS loans?


Parent PLUS loans are federal undergraduate student loans offered to parents of children and/or adopted children that attend accredited and eligible colleges or universities nationwide.


PLUS loans are unsubsidized, meaning that even when your child is enrolled in college, interest will still accrue on the loans.


Other undesirable aspects of Parent PLUS loans include:

  • A current interest rate of 6.28% (Direct PLUS), which is much higher than for other federal undergraduate loan types

  • A loan origination fee of 4.228% assessed by the government

  • Access to only one income-driven repayment plan (income contingent repayment, which is the most expensive and least advantageous plan)


But if you meet income eligibility requirements, at least the interest paid on Parent PLUS loans is tax deductible.


Student loan repayment calculator



Can you refinance Parent PLUS loans?


Yes, you can, with a wide array of private lenders.


Parent PLUS loans are some of the most popular student loans to be refinanced, since these borrowers are old enough to have college aged children and are more likely to have stable income and established credit histories that may produce favorable refinancing terms.


Combined with the fact that these loans have few repayment strategies and carry higher interest rates than many other federal student loan debt, refinancing your PLUS loans can actually make a lot of sense.


If your child has established a career, or you're just looking to rid yourself of the burden of debt, you can even transfer these loans into your child's name, though only certain lenders will do this for you. CommonBond and Laurel Road are likely among your best options here. We'll talk about this in more detail later.



Why would you refinance parent student loans?


Many Americans wonder if refinancing their parent loans may be the right decision for them. Generally, it may make sense for you to refinance your loans if the following are true:

  1. You have stable employment and predictable income (salaried worker)

  2. You have a good credit score and credit history

  3. You owe a lot of money in PLUS loans at a high interest rate

If these three statements are all true, then refinancing may be the perfect option for you!




Top private lenders to refinance your Parent PLUS loans


Some of the top lenders that will allow you to refinance Parent Plus loans are:



1. SoFi


SoFi has options across the entire student loan spectrum, offering student loan refinancing for undergraduate loans, graduate loans, and Parent PLUS loans.


Eligibility requirements to refinance with SoFi are pretty standard, and come with a nice perk: SoFi will only perform a soft credit check to gauge your eligibility, rather than a hard credit inquiry that could decrease your credit score.


The SoFi student loan refinancing website

The estimated minimum credit score to refinance with SoFi is believed to be 650, though the majority of applicants are above 700.


Additionally, you'll likely need the following to qualify:

  • Ample monthly free cash flow (this is used instead of a minimum income requirement)

  • Be a United States citizen, permanent resident, or hold a qualifying visa

  • Must be employed or have accepted a job offer with a start date in the next 90 days

As it pertains to Parent PLUS refinancing, SoFi offers the following perks:

  • No application fees, origination fees, or prepayment penalties

  • Loan terms of 5, 7, 10, and 15 years

  • 12 months (1 year) worth of forbearance over the course of the loan repayment

SoFi also allows your child to take out a loan to repay your parent loan. More on this in a couple minutes.


Essentially, this allows you to "refinance" your parent loan into your child's name.





2. Laurel Road


Laurel Road is one of those private lenders that allow you to refinance and transfer your expensive Parent PLUS loans into a child's name. Of course, you can also refinance these loans into your name if you're just looking for a lower interest rate.


Laurel Road refinancing base eligibility requirements are as follows:

  • A minimum credit score of 660

  • Must be a United States citizen or permanent resident holding a current green card (I-551 card).

  • Must be a graduate to refinance under normal circumstances, but your child does not need to be a graduate to refinance Parent PLUS loans


Similar to SoFi, Laurel Road has no minimum income requirements, which can help more borrowers qualify.


Laurel Road is generally highly regarded as a private lender. Below are just a couple of the perks you can expect by working with them on your student loan debt.

  • Cosigner release - if you refinance PLUS loans into your child's name but need to cosign the loan, you can be released after 36 timely payments in a row

  • Refinancing available during final year of undergraduate education



3. CommonBond


In our opinion, CommonBond is the most unique lender on this list. With a passion for education, CommonBond is a philanthropic organization that has partnered with Pencils of Promise, an organization founded with the mission of promoting educational causes worldwide. In fact, for each degree funded by CommonBond's student loan refinancing service, they pay for the yearly education of a student in nations like Ghana.


In terms of refinancing parent student loan debt, CommonBond, like Laurel Road, is one of the few lenders that allows you to transition Parent PLUS loans over to your child.


In terms of eligibility, Commonbond requires:

  1. Have graduated from a Title IV accredited institution accepted by CommonBond

  2. Refinance loans with a balance between $5,000 - $500,000

  3. Have a minimum credit score of 660, or a co-signer that does

  4. You must be a citizen of the United States, permanent resident, or a visa holder with the following designations: H1-B, J-1, L-1, E-2, and E-3.


With perks like 24 months of forbearance available on each loan, CommonBond has also done its best to make up for its borrowers losing federal rights and protections that were included with their federal student loan debt.




The CommonBond website's home page



4. Earnest


In many borrower's eyes, Earnest is the premier private lender to consider, especially for those with Parent PLUS loans. They are popular with those that may not have great credit, since they also take into account the assets that you have when they underwrite a loan.


Refinancing PLUS loans with Earnest typically has the following requirements:

  • A minimum credit score requirement of 650, which is lower than many other lenders

  • You need to be a U.S. citizen or permanent resident

  • Parent loans cannot be refinanced until your child has achieved his/her degree

  • Current on all debt payments


There are also many perks to Earnest that you should be aware of. Among these are:

  • No need for cosigners, due to their lower credit requirements

  • Payment protections, such as 9 months of grace and precision pricing

  • Make biweekly payments to make budgeting easier


Earnest is not one of the lenders that allow you to transfer parent loans into a child's name, however.




5. Citizens Bank


Citizens Bank can also be a great option to consider. Eligibility to refinance with Citizens is reserved to those that:

  • Have at least $10,000 in outstanding parent loans

  • Are United States citizens, permanent residents, or resident aliens with valid U.S. Social Security numbers

Similar to other private lenders, Citizens offers flexible loan repayment terms of 5, 7, 10, 15, and 20 years, so you're likely to find the option that works best for you. And while you do need $10,000 to be eligible, you can refinance all the way up to $500,000 in parent student loans.


One interesting aspect of using Citizens to refinance is that you can actually secure up to a 0.50% rate discount by using autopay, compared to 0.25% with most other lenders.



Citizens Bank homepage


How to refinance Parent PLUS loans


When it comes to refinancing your Parent PLUS loans, remember that you have two options, depending on the lender. You may opt to:


  1. Refinance your loans "conventionally"

  2. Transfer these loans to a child (more on this below)


As far as the "normal" refinancing process goes, it is pretty streamlined. Most of the PLUS loans out there at this time have interest rates ranging from 6.3% to 7.9%, rates that you should be able to easily beat with a private lender.


To secure a rate low enough to make the process worth it, you'll likely need at least decent credit, as well as proof of sufficient income. But the process itself is easy, and it goes something like this.


  • Download our refinancing calculator and understand how much money you may be able to save

  • Compare and choose the right refinancing lender - use our refinancing guide to help

  • Apply for refinancing and save - Complete the process, application, credit checks, etc. Once approved, your lender will pay off your old loans and you'll begin your new monthly payments.



How to transfer Parent PLUS loans to a student


As you know, transferring Parent PLUS loans to a child is possible. To do so, your child needs to apply for and be granted the loan with the help of a private student loan lender, like the five we mentioned above.


When completing the application, your child will need to do the following:

  1. Answer the questions honestly and accurately, as they may need to be responsible for the loan without the help of a cosigner (this is lender specific)

  2. Remember to note the Parent PLUS loan on the loan application

Then, if/when the loan is approved, the funds can be used to repay your Parent PLUS loan. And as an added benefit, the new loan may even have a lower interest rate.


Make sure that you understand that this process cannot be undone or reversed.



Benefits to transferring Parent PLUS loans


Of course, there are multiple benefits to bidding farewell to your loans. Among these are:

  • The simple fact that you no longer owe any money (though it is at the expense of your child)

  • The opportunity for your child to build credit at a young age

While student loan debt is never an ideal position to be in, refinancing some or all of your parent loans to your children can be a great learning opportunity.



Drawbacks to transferring Parent PLUS loans


When you transfer these loans with the help of a private student loan lender, you'll want to keep in mind that you are forgoing federal rights and protections that you may have not known about it. Your accessibility to forgiveness programs such as PSLF and income-contingent repayment, for example, will be gone forever.


And while some lenders will do their best to offer flexibility where they can, it is not likely to be nearly the same.



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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