Top Reasons your Should Refinance Parent PLUS Loans
One way to manage your debt is for you to refinance Parent PLUS Loans. With this strategy, you take out a loan from a private lender and use it to pay off your current student loans. The new loan has completely different terms than your old ones, which can have many advantages.
If you’re thinking of refinancing your parent student loans, there are several benefits to keep in mind:
1. Refinancing could save you money
If you have good credit and a stable income, you could qualify for a refinancing loan with a much lower interest rate than you have with your current loans.
For example, let’s say you have $30,000 in Parent PLUS Loans at 7.08% interest and 10 years left of repayment. Over the course of your repayment, you’d repay a total of $41,948. Interest charges would cost you nearly $12,000.
But if you refinanced your loans and qualified for a 10-year loan at 3.45% interest, you’d repay a total of just $35,515. You’d save over $6,400 by refinancing your debt.
2. You’ll have one easy payment
If you took out multiple parent student loans for your child’s education, you likely have several due dates, minimum payments, and loan servicers to remember. It can be overwhelming and can cause you to miss payments.
When you refinance your student loans, you can consolidate them all together. Even if you have a mix of federal Parent PLUS Loans and private parent student loans, you can combine them into one loan. Going forward, you could have just one payment to remember, one due date, and one student loan servicer, simplifying your repayment.
3. Refinancing could reduce your monthly payment
If you decide to refinance your loans, you can choose a new repayment term. For example, if you’re currently on a 10-year repayment plan, you may be able to opt for a 20-year repayment term, instead. By doing so, you’ll be able to dramatically reduce your monthly payment.