Can You Transfer a Parent PLUS Loan to a Student?

 July 20, 2021
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Refinance Student Loan rates starting at 2.49% APR

2.49% to 11.72% 1
VARIABLE APR

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2.50% to 6.30% 2
VARIABLE APR

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4.13% to 7.39% 3
VARIABLE APR

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  • Variable APR

Note that the government has paused all repayment on federally held student loans through the end of 2022, with no interest to be charged during that period and no loans to be held delinquent or in default.

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If you’re wondering how to transfer a parent PLUS loan to a student, we have good news: The student can take on the loan by refinancing it in their own name. As long as the student can qualify for refinancing on their own, they can assume full responsibility for the loan.

Keep reading to learn more about how to refinance parent PLUS loans in your child’s name and whether it’s right for you. Specifically, let’s look at:

Transferring a parent PLUS loan to the student through refinancing: the basics

Parent PLUS loans are made directly to parents for their child’s education. The way things are set up now through the Department of Education, parents cannot transfer these federal loans to a child, and they are solely responsible for paying back the loan.

But there is a way to get around this if you’re thinking about how to transfer the parent PLUS loan to the student: refinancing parent PLUS loans in your child’s name. To refinance parent PLUS loans, your child will need to apply and be approved for the loan through a private student loan lender. They would have to supply information about their credit score, school and degree.

Each lender will have varying eligibility requirements — typically, though, lenders want the child to prove they have the financial means to pay back the loan themselves.

Dan Macklin, a co-founder of student loan refinancing company SoFi, noted the following eligibility requirements: “SoFi will take into account several factors, such as [the applicant’s] eligibility, education, career experience, monthly income relative to expenses and financial history in determining whether to refinance a parent PLUS into a loan in the graduate’s name,” he told Student Loan Hero.

To refinance and transfer the parent PLUS loans to your child, follow these three steps:

  1. Ask your child to apply for a student loan in their name with a lender. You can help your child complete the application, but the lender may approve or reject it based on their information alone.
  2. Include the parent PLUS loan on the refinancing application and note that it is under your name.
  3. If approved, the lender will issue your child a new loan, which can be used to pay off your parent PLUS loan(s).

The new loan may have different terms and conditions, and potentially a lower interest rate as well. Unlike the parent PLUS loan, the new loan will be entirely in your child’s name.

“Transferring a loan from parent to child absolves parents from the debt obligation and enables the child to select the appropriate loan terms,” Macklin said. “The child may be able to reduce monthly payments on the outstanding debt, as some parent PLUS loans have rates as high as 8.50%. It also enables the parent to refocus their own goals, such as saving for retirement.”

Benefits of refinancing parent PLUS loans

There are many benefits to refinancing parent PLUS loans to the student, such as:

If you refinance parent PLUS loans to the student and pass on the responsibility of the loan, your child could stand to save money on interest. In addition, they could also take advantage of the unique benefits offered by some lenders, including unemployment protection, career services and networking events.

Drawbacks of refinancing parent PLUS loans

Before you decide to transfer your parent PLUS loan(s) to the student, there are some downsides you should also be aware of, including:

  • By refinancing with a private lender, you’ll lose federal student loan benefits, such as access to income-driven repayment options and Public Service Loan Forgiveness (PSLF).
  • The legal liability for the loans will be transferred to your child, as the parent PLUS loans will be paid off, and your child will now have to repay the new loan.
  • The process is not reversible.

If you want to refinance parent PLUS loans, you and your child should be on the same page. Both you and your child should understand the financial and legal implications of refinancing and also have a firm grasp of what you may be giving up.

Other options for immediate relief

Even if you know how to transfer parent PLUS loans to the student, you might decide this move isn’t right for you and your family, especially if you’re relying on federal benefits. Fortunately, you have a couple of other options for managing your parent PLUS loan(s).

For one, you could explore an income-contingent repayment (ICR) plan, which adjusts your monthly payments in accordance with your discretionary income. Note that you’ll have to consolidate your parent PLUS loan(s) before they’re eligible for ICR.

Another option is loan forgiveness through a program like Public Service Loan Forgiveness. If your job makes you eligible for PSLF or a similar program, you could get some or all of your balance canceled. You would also have to consolidate your parent PLUS loan(s) with this option, as PSLF requires that you repay under an income-driven repayment plan.

In addition, some employers even offer student loan repayment assistance to help indebted employees.

While none of these options will get rid of your debt overnight, they could provide relief. And if you do decide to refinance your parent PLUS loan(s) in your child’s name, you could say goodbye to your debt for good.

Rebecca Safier contributed to this report.

Interested in refinancing your Parent PLUS loans into your child's name?

Here are the top lenders of 2022!
LenderVariable APR 
2.49% – 11.72%1

Visit Splash

2.50% – 6.30%2

Visit Laurel Road

4.13% – 7.39%3

Visit Lendkey

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 6, 2022.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $9 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of April 29, 2021. Information and rates are subject to change without notice.
 


3 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 09/09/2022 student loan refinancing rates range from 4.13% APR – 7.39% Variable APR with AutoPay and 2.99% APR – 9.93% Fixed APR with AutoPay.