Refer a friend to refinance their student loans, get $400. Click here to learn more! đź’°đź’°đź’°

4 Easy Options to Get Parent PLUS Loans Under Control in 2017

parent plus loan

Most student loan articles focus on struggling college graduates who can’t repay their debt.

But what about their parents? We hardly ever hear about the moms and dads who are stuck repaying Parent PLUS Loans for children who obtained undergraduate degrees.

Parent PLUS loan debt currently stands at about $77.8 billion. Even worse, these types of loans have the highest interest rates among all federal student loans. For the 2016-17 school year, the rate is 6.31%, and older Parent PLUS loans could have rates above 7%.

So what can parents do to ease the strain on their finances? Here are four ways to get your Parent PLUS debt under control this year.

1. Income-Contingent Parent PLUS Loan repayment plan

Pros: Lowers monthly payments and offers Parent PLUS loan forgiveness after 25 years.

Cons: Likely increases total interest charges. Requires paying a higher percentage of income than other income-driven repayment plans.

The federal government offers four types of income-driven repayment plans, but Parent PLUS loans are only eligible for one: Income-Contingent Repayment (ICR).

ICR caps monthly student loan payments at 20 percent of the borrower’s discretionary income. Keep in mind that discretionary income is usually less than gross income earned.

Parents generally have to pay a larger chunk of their discretionary income with this plan, but these payments can still be less than the other options. This is helpful if you hope to free up some extra cash flow each month.

One advantage of ICR is that you’ll be eligible for Parent PLUS loan forgiveness after you make payments for 25 years. However, spreading payments out over such a long period can cost you more in interest overall. Plus, you might also be subject to additional taxes on the amount forgiven.

To qualify for ICR, your Parent PLUS loan needs to be consolidated first by the Department of Education into a Direct Consolidation Loan. This is the standard federal student loan consolidation option. To apply for a Direct Consolidation loan, you should contact your student loan servicer.

2. Parent PLUS Loan consolidation and refinancing

Pros: Could decrease high interest rates on Parent PLUS Loans.

Cons: Requires borrowers to qualify based on credit and income. Borrowers could also lose some flexibility afforded by federal student loans.

Parent PLUS Loan refinancing has the potential to work especially well for some borrowers. In general, parents of college students have more established credit histories than graduates in their 20s. If you’re a parent with a high credit score, then you have a better chance of approval for student loan refinancing.

Lenders that refinance Parent PLUS loans like to see steady income and employment history as well, which will increase your odds of being approved. Want to get a sense of whether you might qualify to refinance? Take our refinancing eligibility quiz!

Private student loans don’t have all of the same repayment options that federal student loans do. While you can change federal student loan repayment plans at any time, this isn’t the case with private student loans. Once you complete refinancing, your only other option is to refinance again if you want to change your repayment terms.

You need to determine whether a lower monthly payment and the interest savings are worth giving up some of the federal protections. Many parents choose to refinance Parent PLUS loans to improve their finances so they can rescue their retirement.

Refinancing Parent PLUS loans includes another option: refinancing your Parent PLUS loans into your child’s name. With this option, your child becomes responsible for their debt, and you no longer need to make payments. It can take the pressure off you, especially if you have been struggling.

Refinancing to a child’s name is currently offered by lenders such as SoFi, Laurel Road, and CommonBond.

3. Public Service Loan Forgiveness (PSLF)

Pros: Eligible for Parent PLUS loan forgiveness after 10 years.

Cons: Limited to certain career fields.

Public Service Loan Forgiveness (PSLF) is a federal program available to certain public service employees, such as those in government and nonprofits fields. This program forgives all federal student loan debt after 120 qualifying payments (typically 10 years).

Many graduates on track to take advantage of Public Service Loan Forgiveness do so with income-driven repayment plans. Just keep in mind that most of these plans aren’t available for Parent PLUS loans. Instead, you’ll likely need to consolidate your loan with the federal government and use Income-Contingent Repayment.

Before you shoot for PSLF, make sure you qualify. All of the rules that apply to other federal student loans typically apply to Parent PLUS loans as well.

As with any loan for which you plan to take advantage of loan forgiveness, make sure that your strategy is a smart one. It’s possible that you might not have much or any debt left to forgive after the repayment period. This can do more harm than good if you pay a bunch of extra interest yet receive nothing in return.

4. Standard Parent PLUS Loan repayment

Pros: Keeps the total loan cost down via repayment over 10 years.

Cons: Could be less affordable due to higher monthly payments.

If you’re paying off a Parent PLUS loan, you’ll automatically be enrolled in the Standard Repayment Plan. There’s nothing wrong with this option, as long as you can afford to make the monthly payments. Stay on track, and you’ll have the loans paid off in 10 years.

The problems with standard Parent PLUS loan repayment only surface if you can’t afford to make payments. In such cases, consider pursuing another repayment option instead of risking default.

It’s worth noting that graduated repayment and extended repayment options are also available. However, these often aren’t preferable to the other options listed here. They generally add more time and interest to your overall repayment. You can get a lower monthly payment now, but the added interest costs are generally high.

Take control of your Parent PLUS loans

No matter which repayment method you choose, all student loans are eligible for a student loan interest tax deduction of up to $2,500. However, since this deduction is subject to several rules (including income caps), consider consulting with a tax professional to make sure you qualify.

Overall, the best option for you will depend on your situation. But the right choice is typically the one that allows you to pay off your student loans as quickly as possible — with the lowest cost.

Interested in refinancing your Parent PLUS loans?

Here are the top 6 lenders of 2017!
LenderRates (APR) 
Check out the testimonials and our in-depth reviews!
2.61% - 6.74%Visit SoFi
3.64% - 7.20%Visit Laurel Road
2.61% - 6.74%Visit CommonBond
2.52% - 7.26%Visit LendKey
2.54% - 8.39%Visit Citizens
2.61% - 6.49%Visit Earnest
Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

Our Top 6 Picks for Student Loan Refinancing

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.


TOP PICKS SoFi logo Laurel Road logo CommonBond logo Citizens Bank logo Earnest logo
Variable Rates
Variable-rate student loans have interest rates that can change during the repayment period. Interest rates may increase or decrease at any time and typically do so based on changes to LIBOR. Often, the introductory rate on a variable-rate loan is lower than that of a fixed rate loan, though it has the potential to increase later. Learn more
2.61 %- 6.54 % 3.64 %- 6.29 % 2.61 %- 6.54 % 2.54 %- 8.39 % 2.61 %- 6.28 %
Fixed Rates
A fixed-rate student loan guarantees a single interest rate that does not change over the lifetime of the loan. Fixed-rate loans often have higher rates than the introductory rates on variable loans. However, borrowers have peace of mind knowing their monthly payments will always be the same amount. Learn more
3.35 %- 6.74 % 4.20 %- 7.20 % 3.35 %- 6.74 % 4.74 %- 8.24 % 3.35 %- 6.49 %
Terms
"Term" refers to the length of the loan, typically in years. In general, the shorter the term, the lower the interest rate and the higher the monthly payments. Longer terms will typically result in lower monthly payments but at a higher interest rate. Borrowers may select any term offered by a lender regardless of the current loan term. Learn more
5, 7, 10, 15, 20 5, 7, 10, 15, 20 5, 7, 10, 15, 20 5, 10, 15, 20 5 to 20
Soft Credit Check
A "soft" credit check allows a lender to check the applicant's credit and provide the applicant with an estimated interest rate without affecting their credit score. This is unlike a "hard" credit check, which may impact an applicant's credit.
Visit SoFi Visit Laurel Road Visit CommonBond Visit Citizens Visit Earnest

ELIGIBILITY REQUIREMENTS

Transfer Parent PLUS From Parent to Child/Graduate
Many parents take out "Parent PLUS" loans to pay for their children to attend college. Some lenders will permit the refinancing of those Parent PLUS loans from the parent's name into the name of the child/graduate.
Refi Parent PLUS Loans
Indicates whether or not the lender allows parents who took out Parent PLUS loans on behalf of their children to refinance their loans.
Eligible Degrees
Our partners refinance student loans from both undergraduate and graduate degrees.
Undergrad
& Graduate
Undergrad
& Graduate
Undergrad
& Graduate
Undergrad
& Graduate
Undergrad
& Graduate
Eligible Loans
Our partners refinance both private and federal student loans. Both types of loans can be consolidated to create a single payment.
Private & Federal Private & Federal Private & Federal Private & Federal Private & Federal
Min. Credit Score
This is the lowest credit score a lender will consider when determining borrower eligibility. While some lenders do not indicate a specific minimum score, they typically still evaluate a borrower's credit profile to determine eligibility. Learn more
Good or Excellent score needed 680 660 680 No min
Min. Annual Income
The minimum annual income a lender is will consider for borrower eligibility.
No min No min No min $24k No min
No Cosigner Required
If checked, this lender does not require that the applicant have a cosigner to apply.
Ability to Apply With a Cosigner
Applicants have the option to add a cosigner to meet eligibility requirements and/or get better rates and terms on their loan.
Visit SoFi Visit Laurel Road Visit CommonBond Visit Citizens Visit Earnest

ELIGIBILITY REQUIREMENTS Continued

Cosigner Release Offered (Existing Loans)
If the applicant's initial student loans had a cosigner, the applicant may have the option to refinance their loans solely in the borrowers name and "release" the original cosigner(s).
Cosigner Release Offered (Refinanced Loans)
If the applicant chooses to add a cosigner to the refinanced loan, the applicant may have the option to "release" that cosigner from the refinanced loan at a later date.
Borrower Can Be Delinquent on Current Student Loans
If the borrower's student loans are currently delinquent (but not in default), they may or may not be eligible to refinance.
Borrower Can Apply While Still Enrolled in School
If a borrower is currently enrolled in a graduate or undergraduate degree program and has not yet earned a degree, the borrower may or may not be eligible to refinance.
(with signed job offer)
Borrower Must Currently Be Employed
Certain lenders may require the borrower to be employed in order to be eligible for student loan refinancing.
Yes (or signed job offer) Yes (or signed job offer) Yes (or signed job offer) Yes Yes (or signed job offer)
Minimum GPA Required
Our partners currently refinace student loans regardless of a borrower's graduate or undergraduate GPA.
No min No min No min No min No min
Visit SoFi Visit Laurel Road Visit CommonBond Visit Citizens Visit Earnest

Refinancing Product Information

Min. Lending Amount
The minimum student loan balance a borrower must currently have to refinance with the lender.
$5k $5k $5k $10k $5k
Max. Lending Amount
The maximum student loan balance a borrower must currently have to refinance with the lender.
No Max No Max $500k $90k undergrad
$225k grad
No Max
Auto-Pay Interest Rate Reduction
Lenders may offer an interest rate reduction for setting up automated monthly loan payments. This reduction is typically already factored into the fixed and variable rates quoted above.
Yes
0.25%
Yes
0.25%
Yes
0.25%
Yes
0.25%
Yes
0.25%
Average Savings
The average amount borrowers have saved by refinancing with this lender. Unless indicated otherwise, values shown are over the lifetime of the loan. See each lender's website with more details on how this figure is calculated.
$316/month* $20,200* $24,046* $132/month* $21,810*
Unemployment Protection/Benefits
If a borrower loses their job through no fault of their own, they may be eligible to receive unemployment benefits with some lenders. If approved for this benefit, the lender will put the borrower's loans into forbearance, suspending their monthly loan payments. Unpaid interest will continue to accrue and will be capitalized (added) onto the borrower's principal balance. Borrowers typically have the option to make interest-only payments during this period in order to prevent accruing interest from increasing their balance.
(up to 12 months)
(up to 12 months)
(up to 12 months)
(up to 12 months)
(up to 12 months)
Interest-Only Payment Option
Some lenders may allow you to make interest-only payments for a period of time during your repayment period.
Discharge Due to Death
Some lenders may discharge the student loan upon the death of the borrower.
Visit SoFi Visit Laurel Road Visit CommonBond Visit Citizens Visit Earnest

Refinancing Product Information Continued

Origination Fees
Origination fees are added expenses that lenders may charge for granting a new loan.
None None None None None
Prepayment Penalty
Prepayment penalties are fees charged by lenders for paying off the balance of the loan before its scheduled pay-off date.
None None None None None
State Residency
Some lenders may not refinance student loans for residents of certain states.
Any except residents of NV Any Any except LA, ME, RI, or NV Any See Below
Previously Defaulted (Now Rehabilitated)
Loans Eligible
Indicates whether or not the lender allows loans that were previously in default, but have now been rehabilitated, to be refinanced. Loans currently in default are generally not eligible for refinancing.
Visit SoFi Visit Laurel Road Visit CommonBond Visit Citizens Visit Earnest

Borrowers must reside in one of the following states to be eligible to refinance their student loans at Earnest: AK, AR, AZ, CA, CO, CT, FL, GA, HI, IA, ID, IL, IN, KS, LA, MA, MD, ME, MI, MN, MO, MT, NC, ND, NE, NH, NJ, NM, NY, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, VT, WA, Washington D.C., WI, WV, or WY

ADDITIONAL INFORMATION

Avg. Time to Check Rate
An estimate of how long (on average) it will take for a borrower to simply check their refinancing interest rate. For lenders that offer a soft credit check, this will not hurt a borrower's credit score.
< 3 minutes < 3 minutes < 3 minutes < 3 minutes < 3 minutes
Avg. Time to Apply
An estimate of how long (on average) it will take for a borrower to fully complete a student loan refinancing application.
< 10 minutes < 10 minutes < 10 minutes < 20 minutes < 15 minutes
Apply on Mobile Device
Indicates whether or not a lender accepts applications from a mobile device.
Interest Is Tax Deductible
Indicates whether or not the interest paid on the refinanced student loan may be eligible for the student loan interest tax deduction (assuming all other eligibility requirements are met). Learn more
Personal Reference Required
Some lenders may require a personal reference in order to apply for student loan refinancing.
No No No No No
Year Established
The year the student loan refinancing company was established.
2011 2006 2011 1828 / 2014 for refi student loans 2013
Visit SoFi Visit Laurel Road Visit CommonBond Visit Citizens Visit Earnest

* Average savings based on lender specific calculations. Please visit their site for more information.

Our Top 6 Picks for Student Loan Refinancing

Lender Rates (APR) Loan Types Terms Eligible Degrees Eligible Loans More Info
2.61% - 6.74% Variable & Fixed 5, 7, 10, 15, 20 Undergrad & Graduate Private & Federal Visit SoFi
3.64% - 7.20% Variable & Fixed 5, 7, 10, 15, 20 Undergrad & Graduate Private & Federal Visit Laurel Road
2.61% - 6.74% Variable & Fixed 5, 7, 10, 15, 20 Undergrad & Graduate Private & Federal Visit CommonBond
2.52% - 7.26% Variable & Fixed 5, 7, 10, 15, 20 Undergrad & Graduate Private & Federal Visit LendKey
2.54% - 8.39% Variable & Fixed 5, 10, 15, 20 Undergrad & Graduate Private & Federal Visit Citizens
2.61% - 6.49% Variable & Fixed 5 to 20 Undergrad & Graduate Private & Federal Visit Earnest
Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

Published in Federal Student Loan Refinancing, Federal Student Loan Repayment, Federal Student Loans, Pay Off Student Loans, Private Student Loan Consolidation, Private Student Loan Refinancing, Public Service Loan Forgiveness, Student Loan Consolidation, Student Loan Repayment Options