Updated June 15, 2017
Laurel Road Bank is one of a select few lenders that will refinance Parent PLUS loans. You may qualify for this refinance if your child has graduated and is now employed.
This refinance can potentially save you a great deal of money if you have a strong credit history because the interest rates are so competitive. For example, currently Parent PLUS rates are 6.84% for loans disbursed between July 2015 and July 2016. Laurel Road Bank offers fixed rates from 3.50% to 7.02% APR depending on creditworthiness, so even those getting the high-end of interest rates could see savings.
Another benefit of the Laurel Road Bank refinance is your child may qualify to refinance Parent PLUS loans with his or her own student loans from Laurel Road Bank to relieve you of financial responsibility.
Laurel Road Bank Parent PLUS Refinance Overview
Fixed interest rates range from 3.50% to 7.02% APR. Variable interest is 2.25% to 6.65% APR. Unlike fixed interest, variable interest can fluctuate during the life of your loan depending on market conditions. Laurel Road Bank has an interest cap of 9% for the 5, 7 and 10-year loan terms. For the 15 and 20-year loan terms, the variable interest cap is 10%.
In most cases, fixed interest is your preferred method of refinancing. Because even a high-end APR with Laurel Road Bank is lower than the federal Parent PLUS loan APR, the only scenario where variable interest may be a good choice is if you plan to pay off the loan quickly to take full advantage of low interest rates. Otherwise, a variable rate for a long-term loan can be risky and can rise to 9% to 10% APR based on Laurel Road Bank’s rate cap.
The minimum amount you can refinance is $5,000 and Laurel Road Bank will refinance up to 100% of your Parent PLUS loans. Laurel Road Bank interest rates include a 0.25% discount for using auto-pay, which is a common discount with student loan refinances.
However, with this refinance you have to make your auto-payments through a Laurel Road Bank checking account to qualify for the discount, which can be a hassle if you don’t bank with them. The Laurel Road Bank checking accounts are free and if you don’t have one you can apply for one during the application process, but they don’t have many branches, so you’ll most likely have to deal with them via ATMs and direct deposit. There are no ATM fees and Laurel Road Bank will refund up to $25 for fees charged by other bank ATMs.
Laurel Road Bank Parent PLUS Loan Qualifications
To qualify for a Laurel Road Bank loan, you must be a U.S. Citizen or permanent resident and your child must have completed his or her degree. In terms of creditworthiness, Laurel Road Bank looks for borrowers who have loans in good standing, make more than $50,000 annually and have no adverse credit history. Laurel Road Bank does accept cosigners if you don’t meet the eligibility requirements on your own or if you want to qualify for a lower rate.
Fees & Gotchas
The Laurel Road Bank Parent PLUS refinance is low on fees. There are no application fees, processing fees or prepayment fees. You’re given a 15-day grace period before you get a late fee. After the 15th day you’ll get a 5% or $28 late fee, whichever one is less. The returned payment fee is $20.
Pros and Cons
The clear pro of refinancing a Parent PLUS loan with Laurel Road is the savings on interest payments. Generally, parents have many years worth of credit history, which puts them in a good place to nab a more competitive interest rate.
Laurel Road Bank also offers full or partial forbearance to pause payments without penalty if you experience financial hardship. Of course, you have to apply for it and get approved. A Laurel Road Bank loan can also be forgiven if you pass away or become disabled.
The key disadvantage of refinancing a government-backed loan (like the Parent PLUS) is missing out on federal loan protections. These protections come in handy if you fall on hard times. They include income-contingent payments, which can lower your monthly payment if your income is below a certain level, as well as forbearance. Forbearance allows you to stop making payments for up to 12 months, but interest will still accrue during this time. With discretionary forbearance, such as financial hardship or illness, your lender will decide whether or not to approve you.
Before you refinance a Parent PLUS loan, you should be 100% confident you can make on-time payments with the monthly payment you have today. You should also have a solid understanding of what benefits you’ll no longer qualify for when you refinance to a private loan.
Parent PLUS Refinance Alternatives
How does Laurel Road Bank stack up to other available Parent PLUS refinances?
SoFi offers a Parent PLUS refinance as well. SoFi currently has variable rates from 2.05% to 5.59% APR with autopay. Fixed interest rates range from 3.46% to 5.59% APR (if you sign up for auto-pay). Like Laurel Road Bank, SoFi offers some benefits if you face financial hardship like unemployment insurance if you get laid off. It has no application, origination or prepayment fees.
Citizens Bank has fixed interest from 6.64% APR. The interest rates include up to 0.50% in discounts. You get a 0.25% discount for using auto-pay and another 0.25% discount if you have an open Citizens Bank (RI) account before applying. Citizens Bank (RI) allows you to use a co-signer and the co-signer can be discharged after you make 36 on-time payments.
Who Will Benefit Most From the Laurel Road Bank Parent PLUS Refinance?
If you’re a parent with a PLUS loan in good standing, excellent credit and a stable income, you can benefit from the Citizens Bank (RI) Parent PLUS loan. Keep in mind, the lowest interest rates are for people with the very best credit. So, the interest rate you receive may or may not be less than the one you already have. Even if Citizens Bank (RI) sounds like the fit for you, take the time to shop around and find the best rate. Checking rates will only be reflected as one inquiry on your credit score if you shop around within 30-day window.