With nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.
Dori Zinn Loans WriterWith nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.
Written By Dori Zinn Loans WriterWith nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.
Dori Zinn Loans WriterWith nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.
Loans Writer Written ByUpdated: Jun 30, 2022, 9:31pm
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Parent PLUS loans allow parents to take out student loans on behalf of their children in college. These federal loans can be a useful funding source for parents, since they have lower credit requirements and more flexible repayment options than most private lenders.
Once the student graduates, however, some parents want to transfer those loans to their adult children—or those children want to take over the debt from their parents. But can a parent PLUS loan be transferred to the student? It’s possible, but not as easy as you might think. Here’s what to consider.
There’s no federal program that allows you to transfer a parent PLUS loan to the student who benefitted from that loan. If you take out a federal PLUS loan, you’re responsible for it until it’s paid in full.
However, there are other options if you’re determined to transfer the debt. It’s possible to refinance a parent PLUS loan in the student’s name through a private lender. To refinance, the student can take out a new debt to pay off their parent’s existing PLUS loan. The newly refinanced debt would be in the student’s name, and the student would make payments to the private lender.
However, refinancing federal student loans comes with its own set of risks and isn’t right for everyone.
Moving a student loan from the parent to the student has some benefits, but there are some major downsides, too. Consider the following:
If you took out a parent PLUS loan for your child and you want to find alternative ways for them to repay the debt, talk with your child about ways you can both be happy with the payment plan. You might have more choices than you think, including:
If you’re preparing to move your parent PLUS loan into a private refinanced loan, here’s how to do it.
Before you complete an application, read the fine print; not all lenders will refinance a parent PLUS loan into the student’s name. Lenders that do offer it include:
Also consider if the student can meet the lender’s qualification requirements. For example, most lenders will require that the student has graduated from school and can meet minimum credit and income requirements.
When you find a few lenders that fit what you need, compare them based on the offered interest rates, repayment terms and fees.
If the lender offers it, see if the student can prequalify for a refinanced loan. Input some basic information about the applicant and their finances to see if they’d be eligible for a loan with a specific lender. You can see estimated interest rates and repayment terms without hurting your credit score.
If you can’t find a prequalification option, make sure your credit profile is top-notch before completing a full application.
The student might want to take over payments, but if they can’t qualify for their own loan, they’ll need a co-signer. Co-signing a loan means you’re on the hook for payments if your child fails to make them. If they miss payments, you’ll both suffer a drop in your credit scores.
If you plan to co-sign the loan, review the lender’s policies and see if there’s a co-signer release. With this option, the co-signer can be removed from the loan after certain conditions are met.
Once you’ve found the best lender for your situation, complete the application. Get all your documents ready, including recent tax filings, pay stubs and identification, like a driver’s license. If the loan requires a co-signer, the second applicant will also need to provide this information.
Each lender processes and manages applications differently; you might hear back right away or it could take a few days. Depending on your application, you may need to submit additional information to your lender before you’re approved.
Find the best Student Loan Refinance Lenders for your needs.
While refinancing parent PLUS loans isn’t the best option for everyone, it makes sense in certain situations. Consider refinancing if:
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Loans WriterWith nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting a budget or starting to invest. Her work has been featured in the New York Times, Wall Street Journal, CNN, Yahoo, TIME, AP, CNET, New York Post and more.
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