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If you have a Federal Parent PLUS loan, can you refinance it and put it in the student’s name instead of the parent? In other words, once the student has graduated and has a job is there a way to have them take over and pay off the loan or is the parent always on the loan?
Responsibility for repaying a Federal Parent PLUS Loan cannot be transferred from the parent to the student.
There are two ways to have the student make the payments on a Federal Parent PLUS Loan.
One is for the student and parent to enter into a side agreement where the student agrees to make the payments on the Federal Parent PLUS Loan. The Federal Parent PLUS loan is still the parent’s responsibility, but the student will take over the monthly loan payments. If the student defaults, the default will ruin the parent’s credit, not the student’s.
The other is for the student to obtain a private refinance to pay off the Federal Parent PLUS Loan. The student must agree to do this, as the parent cannot refinance the Federal Parent PLUS Loan into the student’s name unilaterally. The parent might need to cosign the loan if the student cannot qualify on their own.
When a federal loan is refinanced into a private loan, the borrower will lose the superior benefits available on federal loans. These include better deferment and forbearance options, income-driven repayment plans, death and disability discharges, and loan forgiveness.
Lenders that will allow refinancing of a parent loan into the child’s name include:
- Commonbond
- KeyBank (Laurel Road)
- Nelnet
- SoFi
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