Refinancing with Earnest
Refinancing rates from 2.50% APR. Checking your rates won’t affect your credit score.
Parent PLUS loans are a popular student loan for parents who want to help their children pay for school. Parents with good credit can use these loans to borrow the full amount of their kid’s annual college education.
However, helping your children can come at a cost. A recent Student Loan Hero survey found that 55 percent of parents owe $40,000 or more for their children’s education. To make matters worse, interest rates for Parent PLUS loans are relatively high; right now, the interest rate is 6.31%, which can cause your loan balance to grow over time.
If you’re struggling to get a handle on your debt, refinancing your Parent PLUS loan can be a smart option. Here are four different approaches you can use to take control of your debt.
1. Refinance in your child’s name
If your loans are keeping you from saving for retirement, paying down your mortgage, or making ends meet each month, one option is to refinance the Parent PLUS loan in your child’s name.
If your child has secured a full-time job and has a good credit score, they can work with a private lender to refinance the loan in their own name. Depending on their credit score and salary, they might even get a lower interest rate, reduced monthly payment, and/or different repayment term that makes managing the debt easier for them.
When your child applies for refinancing, they can choose to extend the repayment term. In turn, they could get a lower monthly payment. Or, they can choose to accelerate repayment to eliminate the debt faster.
This approach completely absolves you from responsibility for the loan. However, it’s important to note that only a select number of lenders allow you to refinance Parent PLUS loans into a child’s name. Laurel Road, SoFi, and CommonBond are some of the few willing to do so.
Parents who still want to help can offer to cosign on the new private loan to help their child get the most competitive interest rate.
2. Refinance the loan yourself
If you’re not willing to have your child take over the loan, you can still save money, get out of debt faster, or reduce your payments by refinancing the loan yourself. With this approach, you are still responsible for the debt, but you’ll have a loan with new repayment terms.
Depending on the interest rate you get and the length of repayment you choose, you could save money over the length of your loan.
Student Loan Refinancing Calculator
However, before moving forward with refinancing, keep in mind that working with a private lender will mean you’ll be ineligible for federal loan benefits. You’ll lose out on access to income-driven repayment plans, deferment or forbearance, and forgiveness programs. But if you’re focused on getting out of debt quickly, refinancing can be a wise strategy.
To get started, check out the eligibility criteria from various lenders and get a quote. Many lenders will give you a quote by doing a soft credit check, which will not affect your credit score. Once you’ve found the best lender for your situation, you can apply and get your new loan.
3. Explore your other options
If you need help with your payments but don’t want to sacrifice federal protections, there are options out there that can help.
One way to make your payments more manageable is to sign up for an Income-Contingent Repayment (ICR) plan. Under an ICR plan, the government extends your repayment term from 10 years to 25. They also cap the monthly payment at a percentage of your income, which can reduce your minimum bill.
If you still have a balance on the loans after 25 years of making payments, the government will forgive the remaining amount. The discharged total is taxable as income, but this approach could help you afford your monthly payments.
Parent PLUS loans are eligible for ICR as long as you consolidate them into a Direct Consolidation Loan first. The process to consolidate your loans is free and can be completed in as little as 30 minutes online.
Public Service Loan Forgiveness
Another way to keep your federal protections is to apply for Public Service Loan Forgiveness (PSLF). But you must work for a non-profit organization or government agency to qualify for PSLF. Under this program, the government will forgive your loans after you make 10 years of qualifying payments while working for a non-profit.
Unlike other forms of forgiveness, where the discharged amount is taxable as income, loans forgiven through PSLF are not taxable.
You can combine signing up for an ICR plan and make reduced payments, and still qualify for PSLF after 10 years.
Is refinancing Parent PLUS loans right for you?
When deciding whether or not to refinance your loans, consider not only your child’s finances, but yours, as well. If you’re getting close to retirement or are planning on a big purchase, having Parent PLUS loans can hold you back. Refinancing the loans, either in your child’s name or your own, can help reduce the burden.
For more information about managing your loans, find out how to pay off student loans faster.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for SoFi.
2 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 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% 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 April 17, 2019, 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 04/17/2019. 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 our student 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.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed 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.
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.
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 $4 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.
4 Important Disclosures for LendKey.
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.
5 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 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.81% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|