Refinancing with Earnest
Refinancing rates from 2.47% APR. Checking your rates won’t affect your credit score.
According to recent research conducted by Sallie Mae, only 48% of parents are currently saving for their children’s college education. Whether through poor planning, rising college expenses, job loss, or other extenuating circumstances, many parents take out student loans on their child’s behalf in order to pay for their education.
While this is generous and sometimes necessary, this also places a burden on many parents. They are often left making Parent PLUS loan payments long after their child graduates, sometimes into their retirement years.
So, should children repay their parents and help with Parent PLUS Loan repayment if their parents took out a loan on their behalf? Should they refinance the loans into their name? Or, should they let their parents pay for the loans since they are the ones who took them out?
There is no easy answer to these questions; the truth is, it really depends on the circumstances of each case.
Sometimes children do not know until much later that this is how their parents financed their education. At the same time, parents might not realize the burden the loans will put on them until many years have passed.
Who is Legally Responsible for Parent PLUS Loans?
Legally, the parent who took out the loan in their name is responsible for Parent PLUS loan repayment. That’s because the parent decided to take out the loan specifically for their child while agreeing to repay it.
However, the child should only do this if they want to and can comfortably make student loan payments on time every month.
Should You Take On Repayment of the Loans?
So what if you don’t or can’t refinance your parent’s PLUS loans into your name? Should you just offer to pay them?
This is a tricky question and it definitely depends on the situation. But in some cases, taking on repayment of these loans might be the right thing to do. This might be the case if
- you have a good relationship with your parents,
- you have a solid, high paying job,
- you can afford the payments, and
- you do not want to burden your parents in their retirement years.
I personally would not want to burden my parents with student loan payments. If they had taken out a loan on my behalf I would likely take over the loan or at least schedule automatic payments for them from my checking account until the loan was paid off. I do not like feeling that anyone is stuck with debt or putting off retirement because of me.
That said, I do have a sweet neighbor who is a retired teacher and mother who makes student loan payments on a Parent PLUS loan every single month. She lives in an expensive part of the country near her family, but because she is frugal and does odd jobs on the side she is also able to pay her Parent PLUS loan regularly and still remain retired.
Making Parent PLUS Loan Repayment Easier
If you cannot afford to take over payments for your parents but still want to help, you can recommend ways your parents can make the Parent PLUS loans more manageable.
For one, they can consolidate and refinance PLUS Loans into a private loan. If they qualify for a lower interest rate to help save money over the life of the loan. This would also lessen the number of loans they have to keep track of, making payments easier to organize.
Your parents can also see if they are eligible for the Income-Contingent Repayment plan, which would require they pay no more than 20% of their discretionary income on student loan payments each month. After 25 years of payments, the loans are forgiven.
Ultimately, leaving your parents saddled with student loan debt for your education is not an ideal situation. It can cause family disagreements over who should be responsible for student loan repayments and can burden your parents and possibly even delay their retirement.
The best thing to do is talk to your parents, have an open dialogue, and try to find a way where you can work together to tackle the debt, whether you both contribute to payments or whether you take over the loan completely.
Interested in refinancing your Parent PLUS loans?Here are the top 6 lenders of 2018!
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
5 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3|
|2.47% – 6.30%1|
|3.02% – 6.44%2|
|2.69% – 7.21%4|
|2.79% – 8.39%5|