What It’s Really Like to Refinance Your Parent’s Loan in Your Name

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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.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

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Refinancing with Earnest

Refinancing rates from 2.47% APR. Checking your rates won’t affect your credit score.

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Each year, millions of parents take out private loans for their children’s college education or cosign a student loan with their children. In fact, approximately 90 percent of private student loans have a cosigner. Though a parent may be able to qualify for a loan more easily, making payments can be a real burden on them.

Student Loan Hero employee Mackenzie Kreitler left college with over $60,000 in private student loans, all under her mother’s name. Mackenzie realized the risk her mom faced, so she looked into taking over the loans. But like others before her, she found out that the process to refinance a parent’s loan is not so easy.

Below, find out how Mackenzie handled her student loans and the lessons she learned along the way.

Managing her student debt

When Mackenzie went to school, her mother took out the loans in her own name through the Massachusetts Educational Financing Authority. Though Mackenzie was responsible for making payments and her mom didn’t have a problem with having the loans under her name, it made Mackenzie uncomfortable.

“My mom would laugh at me when I would say it, but I worried that if something happened to me, my mom would have to pay the loans herself. If I couldn’t keep up with the payments, she’s responsible,” says Mackenzie. “I always felt weird about it. I even took out life insurance so she’d have money to pay the loans if I died.”

Mackenzie started looking into refinancing the loans into her name only. Several lenders will refinance federal Parent PLUS loans to the child’s name, but she found it challenging to find a lender that would work with private loans in a parent’s name.

“A friend of mine refinanced his loans and saved a lot of money, so it seemed like a good idea,” says Mackenzie. “But when I applied with a lender, they denied my application because the loans weren’t in my name.”

Finding a lender

Mackenzie researched lender options and reached out to others for recommendations. She stresses that you should comparison shop before submitting your application, instead of just looking at one lender.

“Ask tons of questions, and don’t be afraid to use the lender’s customer service,” says Mackenzie. “Different lenders have different rules and fees, which can affect your loan’s cost. Finding a lender who doesn’t charge an application or origination fee can save you hundreds.”

Mackenzie eventually chose CommonBond, one of the few lenders out there that will refinance a parent’s loan in your name.

CommonBond made the process easy for Mackenzie. “I was able to do everything online, without having to spend time on the phone,” she says. “I could upload screenshots and documents, and never had to mail anything in.”

Being able to do everything electronically streamlined things for her, and she says that CommonBond was extremely responsive to her questions through chat and email.

It took about a week before CommonBond approved Mackenzie’s application

Saving money with new terms

When Mackenzie received the approval, she was pleased with the loan terms.

“My old loans had very high interest rates: 8.89% and 7.69%,” says Mackenzie. “With CommonBond and the autopay discount, my new interest rate is 5.3%, so I’m very happy.”

That change will make a huge difference. With her outstanding balance of nearly $10,300 at 7.69% and $33,300 at 8.89%, she would have paid back thousands more in interest. The lower rate dramatically reduces how much she’ll pay over time, saving her over $15,000.

Mackenzie says it took a bit longer than she expected for CommonBond to pay off her old loans; it was about 10 days from the time they approved her application to when they paid off her loans. But once it happened, it was a seamless transition.

Paying off debt faster

Another advantage to refinancing is that Mackenzie will pay off her loans years ahead of schedule. She deliberately lowered her repayment term. She had 10 years to repay her loans with the old lender, but she reduced her new loan to just five years.

With the new loan terms, she pays more each month but much more of her payment goes towards the principal.

“Before, I was putting so much extra money towards the loans but it felt like I wasn’t making a dent,” says Mackenzie. “Now, I’ll be debt-free within five years.”

What to know before you refinance your parent’s loan

Be aware that refinancing in your name may cause a bump in the interest rate if your credit score and income are lower than your parent’s.

Make sure your credit is in good shape before applying so you get the best interest rates available.

For more information about refinancing or to submit your application to refinance your parent’s loan, check out these lenders.

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

Here are the top lenders of 2018!
LenderVariable APR 
Check out the testimonials and our in-depth reviews!

1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. 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.

2 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.899% APR to 8.179% APR (with AutoPay). Variable rates from 2.570% APR to 6.980% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. SoFi rate ranges are current as of September 14, 2018 and are subject to change without notice. See APR examples and terms. Lowest variable rate of 2.570% APR assumes the current index rate derived from the 1-month LIBOR of 2.08% plus 0.740% margin minus 0.25% AutoPay discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2.57% – 6.98%3Visit SoFi
2.80% – 6.22%1Visit Laurel Road
2.48% – 6.25%2Visit CommonBond
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.