Should You Refinance Parent PLUS Loans?October 25, 2019
Parents spend their days and (sleepless) nights trying to create the best life for their children. We bake cookies for bake sales, we spoil them on their birthdays, we shuttle around town to dance classes and lacrosse games, and we even take out loans for them—big loans—to help them pay for college. So what happens when your baby is all grown up and graduated from college? You cry. You celebrate. Then you get to refinance your Parent PLUS Loan so you can put a little money back in the “Me” column of your budget.
Back up. What’s a Parent PLUS Loan?
Skip ahead if you’re already the proud owner of one of these loans.
A Parent PLUS Loan is a federal education loan taken out by parents to help pay for their child’s college tuition. The U.S. Department of Education actually offers Direct PLUS Loans to parents or graduate and professional students—the loan is simply called a Parent PLUS Loan when it’s made to a parent.
These loans are available to moms and dads of dependent undergraduate students and offer one way to pay for your dependent child’s college education. Parent PLUS Loans differ from other college loans because the parent assumes complete financial responsibility (i.e., if payments aren’t made on time, it affects the credit score of mom and/or dad). While some parents may be eager to help foot the bill for their child’s education, you should always explore private student loans, since Parent PLUS Loans come with origination fees while private student loans typically do not. You should also compare the interest rates on the Parent PLUS loans to rates offered by private student loan companies such as ELFI.1 When evaluating the costs of Parent PLUS loans vs private student loans, you should compare the annualized percentage rate, or APR, which includes both interest and origination fees. In addition, private lenders offer the ability to have your child/dependent be a co-signer on the loan whereas the Parent PLUS loan does not.
Options for Refinancing Parent PLUS Loans
Even though your child/dependent may not have graduated from college yet, you can lower your debt burden by taking advantage of refinancing your Parent PLUS loans (and private student loans) and potentially saving money by either lowering your interest rates and/or extending the term of your payment. The good news about refinancing Parent PLUS loans is that you can refinance the loans more than once, assuming you qualify. So you can refinance your Parent PLUS Loans at any time with a private lender even before your dependents/children graduate! If you have multiple Parent PLUS loans, you can combine them all, if economic, when your dependents/children graduate as well!
Even though Parent PLUS Loans are originated through the U.S. Department of Education, you can refinance them through a private lender. Refinancing your Parent PLUS Loans with ELFI1 could mean:
- Lower Interest Rates
- Different Interest Types (Variable1 vs Fixed)
- One, Simple Payment
- Choose a New Repayment Term Length
If you’re a parent who financially supported your child’s education through a Parent PLUS Loan, see if you qualify to refinance that Parent PLUS Loan or simply learn more about our Parent Loan Refinancing options. Refinancing could establish flexible repayment plans and competitive interest rates that could lower your monthly payments or total cost of the loan. ELFI Customers reported saving an average of $309 every month and an average of $20,936 in total savings after refinancing student loans with Education Loan Finance.2
If you’re considering refinancing your Parent PLUS loans and/or your private student loans, consider a refinanced Parent Loan from ELFI.1 ELFI provides parent loans with flexible payment terms of 5, 7, and 10 years and no penalties for paying them off early.1 You can refinance both your Parent PLUS loans and your private loans into a single private loan. Rest easy knowing you’ve secured a low-interest rate and chosen a repayment plan that’s tailored to fit your lifestyle.
1Subject to credit approval. Terms and conditions apply. The interest rate and monthly payment for variable rate loans may increase after closing. Your interest rate will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.10 per $1,000 borrowed. To qualify for refinancing or student loan consolidation through Education Loan Finance, you must have at least $15,000 in qualified parent loan debt and the student must have earned a bachelor’s degree or higher from an approved post-secondary Education Loan Finance institution. Education Loan Finance Parent Loans are limited to a maximum of the 10-year term.
2Average savings calculations are based on information provided by SouthEast Bank/Education Loan Finance customers who refinanced their student loans between 8/16/2016 and 10/25/2018. While these amounts represent reported average amounts saved, actual amounts saved will vary depending upon several factors.
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