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Should I Refinance My Student Loans?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Refinancing student loans is similar to refinancing other types of debt — you apply for a loan and use the money to pay off your existing loans. With student loans, the refinancing lender will generally send the money directly to your current loan servicers, and you’ll then start making monthly payments to your new lender.

You may be able to simplify your monthly payments by combining multiple student loans into one new loan. Refinancing could also save you money if you get approved for a lower interest rate than you’re currently paying, and you may be able to decrease your monthly payments depending on your loan’s rate and term.

10 questions to ask when deciding if you should refinance your student loans

There are many pros and cons to refinancing student loans, but everyone’s circumstances are different and there isn’t a universal answer to whether refinancing your student loans is a good idea.

What is certain is that once you refinance your loans you can’t undo the process — your old loan has been paid off, and you’re working with a new loan now. You may be able to refinance again, but you’ll never be able to switch back to your original terms.

To help you decide the best course of action for your situation, ask yourself the following questions. The answers can help you determine if you should refinance your student loans.

1. Do you have federal or private student loans?

A variety of institutions originate student loans, including the U.S. Department of Education and private banks. As a result, you may have federal student loans, private student loans or a mix of the two.

You may be able to refinance federal or private student loans, and you may be able to combine both your federal and private loans into one new private student loan. (Only private lenders offer refinancing.)

If you have federal student loans, one of the largest potential downsides to refinancing is that your new private loan won’t be eligible for federal student loan programs, including income-driven repayment programs, forgiveness, cancellation, forbearance, deferment and discharge options. Private lenders may offer some similar programs that allow you to delay making payments if you’re experiencing a hardship, but they don’t offer loan forgiveness programs.

If you have private student loans, replacing your current loan with a new private student loan may not be as difficult of a decision. However, you’ll still want to compare each lenders’ programs and benefits rather than solely comparing the interest rates and loan terms.

2. Do you plan on using a federal repayment plan?

Federal student loans may be eligible for up to five income-driven repayment (IDR) plans. In some cases, your monthly payment amount could drop to $0, and you can switch between plans for free at any time.

The IDR plans can be especially helpful for those who are having trouble finding work or are pursuing a career in a low-paying industry. In addition to making your monthly payments more affordable, with four of the IDR plans, the remainder of your loan balance could be forgiven after you make payments for 20 to 25 years.

If you’re on an IDR plan, or think being able to switch to an IDR plan could be helpful in the future, you may not want to refinance your federal student loans. After refinancing, your new private loan won’t be eligible for federal IDR plans.

3. Do you want to use a federal loan forgiveness or cancellation program?

Your federal student loans may be eligible for a forgiveness program, such as the Public Service Loan Forgiveness (PSLF) program or the Perkins loan cancellation program. Private student loans aren’t eligible for these programs.

If you’re considering one of the programs, you may want to research all the eligibility requirements, including which loans qualify for the program and the requirements for receiving forgiveness or cancellation.

Those who qualify, or who have already been making eligible payments towards one of the programs, may not want to refinance the loans that will be forgiven or canceled.

However, private student loans don’t qualify for the programs and there are different types of federal student loans, some of which may not be eligible for the program you’re pursuing. You may want to consider refinancing those loans.

4. Can you save money by lowering your interest rate?

Congress sets the interest rate on federal student loans, and if you previously took out a private student loan your interest rate could depend on the lender, your creditworthiness and your cosigner if you had one.

When you refinance your student loans, the interest rate of the new loan can also vary depending on your current creditworthiness, the lender and a cosigner.

Lowering your interest rate can save you money in interest payments over the lifetime of your loan and may lead to lower monthly payments depending on your new loan’s term (the amount of time you have to repay the loan).

If you’re only able to get approved for refinancing with a higher interest rate than you currently have, then generally it won’t make sense to go through with the refinancing.

5. What is your credit score?

Your eligibility for refinancing student loans, and the rate and terms you’ll receive, may depend in part on your credit score. Having a high credit score can help you get better rates and terms, and the best offers may go to those with a score in the good to excellent range (e.g., a FICO score above 670). Some refinancing lenders also have a minimum credit score requirement that you must exceed to be eligible for a loan.

If your credit score has increased since you first took out a private student loan, that may be an indication that you could qualify for a lower interest rate now. On the other hand, if it’s dropped, you may not qualify for a lower rate and might want to focus on building your credit and increasing your score before refinancing.

6. What is your income, and what other financial obligations do you have?

Along with a credit score, lenders may look at your income relative to your overall required monthly payments — your debt-to-income ratio. DTI can be an important factor in determining your eligibility for refinancing and your interest rate offer. If your rent or mortgage, loan payments, credit card bills and other monthly obligations make up a large portion of your monthly income, it could be more difficult to qualify for a good rate.

Applicants who have a high credit score and want to refinance their student loans but don’t qualify for a low rate may want to focus on paying down debts, decreasing other financial obligations and increasing their income before reapplying.

7. What could happen if you can’t afford your loan payments?

Federal student loans offer prescribed options for borrowers who have trouble making payments. You may be eligible for an income-driven plan, which can lower your payment amount. Or, you might be able to temporarily stop making payments by putting your loans into deferment or forbearance if you return to school, join the Peace Corps, lose your job, have a medical emergency or meet other criteria.

Although private student loan companies may offer borrowers some hardship options, they vary by lender, and some lenders determine eligibility on a case-by-case basis. If you think you may have trouble making payments later, and particularly if you don’t have an emergency fund to fall back on, you may want to hold off on refinancing your federal student loans.

If you do decide to refinance, carefully review different companies’ hardship policies. You may want to choose the lender with the most favorable or lenient policies, even if it isn’t the one that offers you the lowest rate.

To lower the risk of refinancing, you could choose to refinance at a longer loan term. Although a longer term could result in a slightly higher interest rate, it could also lower your monthly payments. You can always pay more than the required amount to pay off your loan early, but the lower required payment gives you more flexibility if you run into financial trouble.

8. Will you need a cosigner to qualify?

Applicants who have trouble qualifying for refinancing on their own may be able to add a creditworthy cosigner to their application. Even if you qualify on your own, having a creditworthy cosigner could help you get a lower rate.

You can ask any creditworthy person to cosign as long as they meet the lender’s eligibility requirements, although you may feel most comfortable asking a family member. That person takes on a risk by cosigning your loan, because they will be legally liable for the student loan if you don’t pay.

The liability could make it more difficult for the cosigner to qualify for financing elsewhere, and missed payments could hurt the cosigner’s credit. If you stop making payments altogether, both your and your cosigner’s credit could take major hits, and you both might start getting collection calls.

If you do need a cosigner to qualify, you could look for a student loan refinancing lender that offers a cosigner release. Here’s how it works: After making a series of full and on-time payments, you can apply to take over the loan. You’ll need to pass a credit check and qualify for the loan on your own, and if you do, the cosigner will be taken off the loan and you can continue with the same rate and terms.

9. What will the lender do if something happens to you or your cosigner?

With federal student loans, any remaining debt can be discharged if the borrower, or the student for whom a parent PLUS loan was taken out, dies or becomes permanently and totally disabled.

Some private lenders offer a similar arrangement to borrowers, but others may handle these situations on a case-by-case basis and don’t guarantee a discharge. If the debt isn’t discharged, you could be leaving your cosigner with a large bill to pay, or it could be taken from your estate.

Also, review the contract to see what happens if a cosigner dies or declares bankruptcy. In the past, it was a common practice for lenders to place a student loan in default when this happened, meaning you’ll owe the entire balance right away even if you had been making your monthly payments on time. Automatic defaults aren’t as common anymore, but it’s still something you should double check.

10. Which student loans should you refinance?

Based on your circumstances and answers to the questions above, you may find that you want to refinance some of your student loans and leave the others as is.

You may also be able to accomplish some of your goals, such as simplifying your monthly payments, by consolidating federal student loans. Consolidation allows you to combine multiple federal student loans into one loan, and you can choose which servicer you’d like to work with for your new loan.

However, consolidation is only available on federal student loans, and it won’t necessarily save you money, because your new loan will have the weighted average interest rate of the loans you’re consolidating. So if the largest loan you’re consolidating has a lower interest rate than the rates on your loans with smaller balances, the weighted average may produce a lower overall interest rate on your consolidation loan. On the flip side, if your loans with the largest balances also have the highest interest rates, you could actually end up with a higher interest rate on your consolidation loan.

If you decide to refinance additional loans later, or want to refinance all your loans together at some point, you may be able to do that as well. Even if you refinance all your loans now, you may want to refinance again if interest rates drop or your creditworthiness improves.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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College Students and Recent Grads, Student Loan ReFi

5 Best Private Student Loans for 2018

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Taking out private student loans to pay for college is one of the most expensive ways to borrow for school, yet many college students make the mistake of turning to private loans first before pursuing other financing options.

Nearly half (47%) of undergraduates who took out private student loans during the 2011-12 school year didn’t use the maximum available in federal loans, according to a 2016 report by The Institute for College Access and Success (TICAS).

The danger with private loans is in how costly they can be — interest rates on private student loans were as high as 14.24% in September 2017 vs. 4.45% for federal student loans — and how few flexible repayment options they carry for borrowers who struggle to pay them back.

It’s generally best to find ways to fund your education for free with grants and scholarships, turn to your savings and then exhaust your federal student aid. Federal student loans tend to offer lower interest rates and more lenient repayment plans than private student loans, which is why federal aid is often a good first choice.

However, federal loans can only go so far, especially if you are pursuing a postgraduate degree that requires many more years of schooling. Once you’ve tapped out all your access to federal aid and you still need money to cover educational costs, a private student loan could help you fill the gap.

While federal student loans offer a fairly uniform application process and loan terms, private student loan terms can vary widely from one lender to another. If you’re thinking about paying for school with a private student loan, it’s important to compare lenders’ offerings and find the one that’s best for you.

How we ranked the best private student loans

There’s a lot to compare when you’re considering taking out a student loan from a private lender. Your annual percentage rate (APR), fees and loan term could impact how much you pay in interest over the lifetime of the loan. But other features, such as a straightforward application process and the option to apply for cosigner release, can also be important to borrowers.

We started the search for the best private student loan companies by identifying the 10 largest national private student loan lenders. Each lender’s undergraduate student loan got graded on seven important factors:

Private lenders offering loans with varying interest rates depending on the applicant’s creditworthiness. However, they do advertise an interest-rate range that you can use to compare one lender with another. Each lender was assigned grades based on its lowest and highest APRs compared with the average lowest and highest APRs for all 10 lenders. Each lender received four scores, as they all offer variable-rate and fixed-rate loans, and the lenders with below-average APRs received top marks.

Lenders may charge a fee to submit an application or an origination fee that’s based on your loan balance. Only one of the top 10 lenders charges an origination fee, and it didn’t make the top five list.

All the lenders offer an online application, but the clarity and ease of use can vary. The lenders with a simple and easy-to-understand process got the best grades.

Many private student lenders, including all 10 of the lenders we compared, offer a 0.25% interest rate discount if you enroll in autopay from your bank account. A few lenders earned extra points for offering a 0.50% interest rate discount with autopay, or an additional interest rate discount if you have an eligible account with the lender when you take out a student loan.

Most of the private student loans we compared offered several repayment terms with a maximum of 15 years. Lenders that cap their loan’s term below 15 years didn’t score as well. A long repayment term could increase the total amount of interest you pay, but it will also lower your monthly payments and there’s no penalty for prepaying student loans if you find you can afford more.

Most students have a creditworthy cosigner, who can help you qualify for a loan or lower your interest rate. Some private student loan lenders let you apply to release your cosigner after you make consecutive, on-time full principal and interest payments, and pass a credit check. Twelve payments set the bar for a top score as that’s the shortest option available among the lenders we compared.

You may be able to choose from different repayment plans, such as making interest-only payments while you’re in school or fully deferring payments until your post-school grace period ends. Lenders that offer full interest and principal deferment got top marks.

A few lenders earned extra credit because they offer something extra, such as a principal rate reduction or cash back when you graduate.

After assigning the lenders a score for each factor, we compared their average scores and ranked them from highest to lowest. Here are the resulting top five student loan lenders:

Our top picks for private student loan companies

 

SunTrust Custom Choice Loan

Wells Fargo Collegiate Loan

Sallie Mae Smart Option Student Loan

LendKey Private Student Loan

Citizens Bank Student Loan

Ranking

No. 1

No. 2

No. 3

No. 4

No. 5

Borrowing limit

$150,000

$120,000

School-certified cost of attendance

Varies by lender

$120,000

Variable APR*

3.88-12.88%

5.64-11.07%

4.00-9.04%

4.68-9.79%

6.14-11.40%

Fixed APR*

5.35-14.05%

6.84-11.67%

6.25-9.16%

5.36-9.69%

6.39-11.65%

Application fees

None

None

None

None

None

Online application

Good

Good

Good

Very good

Good

Interest rate discounts

0.25% with autopay, or 0.50% if you autopay from a SunTrust Bank account.

0.25% with autopay. Additional 0.25% to 0.50% interest rate deduction if you have an eligible Wells Fargo account when you get your student loan.

0.25% with autopay

0.25% with autopay, you may have to pay from an account with the lender to qualify.

0.25% with autopay. Additional 0.25% interest rate deduction if you have an
eligible Citizens Bank account when
you get your student loan.

Repayment terms

5, 7, or 15 years

15 years

5 - 15 years

10 years

5, 10 or 15 years

Cosign release option

Yes, you can apply after 36 to 48 consecutive full payments

Yes, you can apply after 24 consecutive full payments. Or, after 48 consecutive full payments if your first payment is late.

Yes, you can apply after
12 consecutive full payments

Yes, you can apply after 12 to 36 consecutive full payments

Yes, you can apply after 36 consecutive full payments

Max deferment

Full deferment

Full deferment

Full deferment

$25 monthly payments

Full deferment

Bonus

Request a 1% principal (the loan amount that was disbursed) reduction after you graduate.

None.

None.

None.

None.

Learn More Secured

on SunTrust Bank’s secure website

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on LendKey’s secure website

Learn More Secured

on Citizens Bank (RI)’s secure website

*Rates are current as of July 2, 2018, and may include a 0.25% autopay discount.

#1 SunTrust Custom Choice Loan

SunTrust Bank took the top spot in our comparison of the top private student loan lenders with its Custom Choice Loan. The bank also offers Union Federal Private Student Loans through a partnership with Cognition Lending.

Why we like SunTrust

There are several savings opportunities that help SunTrust’s Custom Choice Loan that help it stand out from the competition. First, as of July 2, 2018, SunTrust had the lowest possible fixed interest rate of the 10 lenders we compared.

Additionally, you can get a 0.50% interest rate discount if you sign up for autopay from a SunTrust Bank account, or a 0.25% interest rate discount with autopay from a different account. And SunTrust Bank will reduce your loan balance by 1% of the disbursed loan amount when you apply for the reduction and show proof of graduation with a bachelor’s degree or higher.

Borrowers can also choose from four different repayment plans: start making full payments immediately, make interest-only payments, pay $25 a month or fully defer payments.

Where SunTrust may fall short

The one big drawback to the SunTrust’s Custom Choice Loan is that you’ll have to make 36 or 48 consecutive full payments before you can apply to release a cosigner.

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#2 Wells Fargo Collegiate Student Loan

You’ll likely recognize Wells Fargo, as it’s one of the largest banks in the U.S., but you may not have realized that it offers student loans. In fact, the company actually has several different student loan programs, with offerings for community college students, undergraduates or graduates and professional school students.

Why we like Wells Fargo

Like many other lenders, Wells Fargo offers a 0.25% interest rate discount if you enroll in autopay. In addition, you can get a permanent 0.25% to 0.50% interest rate reduction if you or your cosigner have an eligible Wells Fargo student loan, consumer checking account or Portfolio by Wells Fargo relationship.

Where Wells Fargo may fall short

You have to choose a 15-year term for your student loan, and if you stick to making your required payment amount you could wind up paying more in interest than if you took out a shorter loan elsewhere.

Also, be sure that you make your first full payment on time. If it’s late, you’ll need to make 48 consecutive full payments (rather than 24) before you can apply to release a cosigner.

#3 Sallie Mae Smart Option Student Loan

Sallie Mae offers a wide range of student loans to undergraduate, graduate and professional students, and their parents. That may not come as a surprise though, Sallie Mae is one of the most widely known private student loan companies.

Why we like Sallie Mae

The undergraduate Smart Option Student Loan has a few standout benefits, such as the option to release a cosigner after making 12 consecutive monthly payments. You can also choose from three repayment plans: full deferment, $25 monthly payments or interest-only payments. And if you’re having trouble making payments after graduation, you can request to make 12 interest-only payments.

Borrowers also get non-loan related perks, such as quarterly access to one of their FICO credit scores. You can also choose to get 120 minutes of free tutoring from Chegg Tutors or free access to Chegg Study for four months (or a combination of the two).

Where Sallie Mae may fall short

Overall, Sallie Mae offers borrowers a variety of choices and benefits. However, it doesn’t offer as many potential discounts as some of the other top lenders. Still, if you find you qualify for a lower pre-discount rate with Sallie Mae than another lender, Sallie Mae could indeed be a smart option.

#4 LendKey Private Student Loan

LendKey stands apart from the other lenders on the top five list because it technically doesn’t loan you money. Instead, LendKey has created a centralized, uniform (and easy-to-use) application that you fill out to get student loan offers from regional banks and credit unions.

Why we like LendKey

Being able to fill out a single application and compare multiple loan options can help you find a low rate, plus the application is quick and easy to fill out. Additionally, some of LendKey’s lenders may let you release a cosigner after making 12 consecutive full payments, which ties for the fewest number of required payments among the top lenders.

LendKey particularly stands because the high-end APR rate for variable- and fixed-rate loans from its lending network are 2% to 3% lower than other competitors. That may not seem like a big difference, but it could lower your monthly payments and lead to saving hundreds to thousands of dollars over the lifetime of the loan.

Where LendKey may fall short

Regional banks and credit unions may not offer student loans nationally, so the interest rate ranges that LendKey advertises may not be available to every borrower. The fine print and eligibility requirements could also vary from one lender to another.

For example, some lenders may require you use autopay from an account with the lender to qualify for a 0.25% interest rate discounts (others may let you qualify with autopay from any account). And how many consecutive payments you need to make before you can apply for a cosigner release, if you can apply at all, could also vary.

All LendKey lenders only offer a 10-year loan term. Other lenders offer a shorter term, which sometimes corresponds with lower interest rates, or you want to lower your monthly payment by choosing a longer term from a different lender.

Also, LendKey student loans don’t offer full deferment and you’ll have to make $25 monthly payments once your loan is disbursed. This could lower your total cost of borrowing compared with full deferment, but if you don’t have any income while you’re at school, it could be difficult to afford the monthly payment.

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#5 Citizens Bank Student Loan

Citizens Bank is a large traditional bank with over 1,000 branches in the Midwest and along the East Coast. It offers student loans to undergraduate and graduate students, their parents and student loan refinancing.

Why we like Citizens Bank

Citizens Bank’s lowest possible variable-rate APR is the lowest of our top five lenders, but even if you don’t qualify for the lowest rate it’s worth considering. And if you or your cosigner have a qualifying bank account or loan from Citizens Bank, as that could make you eligible for a permanent 0.25% interest rate reduction on your student loan.

You may also qualify for multi-year approval if you have more than a year left before you graduate. Often, you may need to apply for a student loan at the start of each term. But with multi-year approval, you could choose (there’s no obligation) to borrow additional money for another term without having to fill out a new application.

Where Citizens Bank may fall short

The primary drawback is the 36-payment requirement to apply to release a cosigner. This aside, Citizens Bank offers competitive rates, a variety of loan terms and interest rate discounts that are in line or could be better than many of the other private student loan companies.

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Determine if a private student loan is right for you

After comparing your options, you may be able to identify the private student loan lender that offers you the best overall loan. However, you may want to take a step back and consider all your options before committing.

Federal student loans. Often, federal student loans should be a borrower’s first choice if he or she has to borrow money. In part, this is because federal student loans offer loan forgiveness programs, repayment plans and guaranteed options to defer payments or put your loans in forbearance that aren’t available from private student lenders.

Also, if you haven’t built credit of your own and don’t have a creditworthy cosigner, federal student loans could be your only option. Most don’t have a credit requirement, and the federal loans for graduate or professional students and parents that have a credit check don’t vary their interest rate based on your credit. By contrast, even with a creditworthy cosigner, you may wind up with higher interest rate if you take out a private student loan.

However, there may be times when a private student loan makes sense or be a necessity. For example, undergraduate federal student loans have annual ($5,500-$7,500) and aggregate (up to $31,000) borrowing limits that may not be enough to cover your educational expenses.

Even if your unsure about whether you’re going to take out federal or private student loans, you may want to fill out and submit the Free Application for Federal Student Aid (FAFSA) every year. In addition to being a requirement for federal student loans and work-study aid, you may need to submit the FAFSA to qualify for some grants and scholarships.

Already have student loans and looking to refinance? Check out our top picks for refinancing student loans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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Reviews, Student Loan ReFi

3 Best Parent PLUS Loan Refinance Options

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

mortar board cash

Updated January 10, 2018

Are you a parent who is still repaying student loans taken out to help your children finance their education? While rising student loan debt totals are concerning for graduates, Parent PLUS loans can be troubling for those in their 40s and 50s trying to plan for retirement.

If you’re in this situation, you should consider refinancing your PLUS loans to lower your interest rate and make the loan more affordable. Direct PLUS loans have had interest rates ranging from 6 – 8% over the last few years, and many refinance programs have rates as low as 2% – 4%. Refinancing can save you hundreds of dollars per month.

Below are the best Parent PLUS refinance programs currently available. We encourage you to check each one out to see which suit your needs the most. You should shop around with each lender with whom you think you can qualify. All credit inquiries made within a 30-day period count as one inquiry in the eyes of the credit bureaus.

A Word of Warning on Refinancing

Thankfully, most student loan refinance programs and Parent PLUS refinance programs don’t have fees associated with the loan, so you don’t need to worry about paying origination or application fees. However, you should do the math to make sure refinancing is worth the paperwork.

If you extend your repayment term, you’ll have a lower monthly payment, but you’ll pay more over the life of the loan due to the amount of interest that will accrue. Additionally, if you’re trying to retire sooner rather than later, extending your term might not be in your best interest.

Ideally, you should find a lender willing to refinance your loan on similar terms with a lower interest rate.

Beyond interest rates, you should also be aware that refinancing your Federal Direct PLUS loan means giving up several benefits specific to Federal student loans. Private lenders don’t offer the same repayment assistance, though some lenders are more flexible than others.

For example, you’ll no longer have access to different repayment plans, such as the Graduated, Extended Repayment Plan or Income-Contingent Repayment. Your loans won’t be eligible for forgiveness under the various Federal student loan forgiveness programs. You’ll also lose out on the benefit of forbearance and deferment, which temporarily allows you to pause payments in the event you experience financial hardship.

If you haven’t been struggling with paying back your PLUS loans, then losing these benefits might not concern you, but it’s a factor you should consider. Otherwise, if you experience difficulty making payments, you should reach out to your lender to see if any other payment arrangements can be made.

SoFi Parent PLUS Refinance Program

SoFi is one of the leaders in the student loan refinance industry, and it offers refinancing specifically for Parent PLUS loans.

  • You can refinance a minimum of $5,000 up to the cost of attendance
  • Fixed APRs range from 3.90% – 7.50% (with autopay)
  • Variable APRs range from 2.47% – 7.17% (with autopay)
  • No application or origination fees, and no prepayment penalties
  • Soft credit inquiry with pre-approval; hard inquiry once you apply for the loan
  • Should have good credit, but it also takes your employment and credit history into account
SoFi

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Laurel Road Bank (formerly known as DRB) Parent PLUS Refinance Program

Laurel Road Bank also offers a Parent PLUS refinance program with low interest rates.

  • A minimum of $5,000 is required to refinance and there’s no maximum amount
  • Fixed rates: 3.50% – 7.02% (with autopay)
  • Variable rates: 3.24% – 6.66% (with autopay)
  • Terms of 5, 7, 10, 15, and 20 years are available, though you can request a specific term under 20 years
  • Also offers a hybrid loan (mix of fixed and variable rates), but you must inquire about it
  • Child needs to have graduated college and be professionally employed
  • No origination fee or prepayment penalty
  • Available in all 50 states
  • Soft credit check first and then hard inquiry when you apply for the loan
Laurel Road Bank

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CommonBond Parent PLUS Refinance Program

CommonBond is dedicated to making the refinance process as simple as possible for students, and has recently introduced a refinance program specifically for Parent PLUS loans.

  • The maximum amount you can refinance is $500,000
  • Fixed APRs range from 3.67% to 7.25% (with autopay)
  • Variable APRs from 2.50% to 7.24% (with autopay)
  • Hybrid APRs (5 years at fixed, then 5 years at variable) are offered
  • No application or origination fees, and no prepayment penalties
  • 5, 7, 10, 15, and 20 year terms available (hybrid loans offered on a 10 year term)
  • Temporary loan forbearance is available if certain requirements are met
  • Soft credit inquiry first, then hard credit inquiry if you apply for the loan
CommonBond

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on CommonBond’s secure website

Keep in mind some lenders, such as SoFi, CommonBond, and Laurel Road Bank, offer the option to transfer your PLUS loans to your child. The Direct PLUS loan doesn’t offer this choice. It’s a great option to have if your child can handle making the payments.

There are many Parent PLUS loan refinance programs being created in wake of the success private lenders have had with refinancing regular student loans. Keep an eye out for them in case you’re not eligible for these. You can also check with your local credit union to see if they have any options available, but be sure the math works out in your favor, as some aren’t offering the best rates. Don’t forget – it’s worth shopping around for the most savings!

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Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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