Refinance Parent PLUS Loans
Best Lenders to Refinance Parent PLUS Loans in 2022
Common Parent PLUS Refinancing Questions
‣ What is a Parent PLUS Loan?
A Parent PLUS Loan is a loan that is provided by the federal government for Undergraduate Students and is also known as a PLUS loan. This loan is generally available through the Direct Loan program. This program allows parents and/or the legal guardian of the student to borrow money that will allow for the student to cover the costs that may not already be covered by the current student’s financial aid package and will help them in covering the full costs and expenses of attending college.
‣ Who makes Parent PLUS Loans?
As of 2010, all Parent PLUS Loans are made by the United States Federal Government. These loans are typically handled through the child’s college however, you may be able to find more info on these loans through studentloans.gov. Through this site, you will be able to get a better idea of what is needed in order to qualify for the Parent PLUS Loan and where to apply for this type of loan.
‣ How much will a Parent PLUS Loan cost me?
At the time of writing this section, interest rates for Parent PLUS Loans are now market-based. What this means is rates may change throughout the week, month, or year during the term of the loan similar to how you see mortgage rates changes. Parent PLUS Loans will have the rate set for the loan on or after July 1 each year. At the time the loan has been issued, the rate that you have received is locked in. One thing to note is that you may qualify for interest rate deductions on your taxes for qualifying low and middle-income families with Parent PLUS Loans.
‣ What are the downsides of a Parent PLUS Loan?
The one major downside of a Parent PLUS Loan is the fact that you are not able to declare bankruptcy on this loan. In fact, with all student loans, you will not be able to file for bankruptcy unlike how you can with mortgages or credit card debt. In extremely rare situations, you may be able to take your case to court.
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.
