Get matched with vetted scholarships and enter our
Please select whichever best describes you for the upcoming 2024 - 2025 academic year.
I’m a high school student I’m a college or graduate student
100% Free. No Spam.
    Start typing in the text field above
    Advertiser disclosure

    Student-centric advice and objective recommendations

    Higher education has never been more confusing or expensive. Our goal is to help you navigate the very big decisions related to higher ed with objective information and expert advice. Each piece of content on the site is original, based on extensive research, and reviewed by multiple editors, including a subject matter expert. This ensures that all of our content is up-to-date, useful, accurate, and thorough.

    Our reviews and recommendations are based on extensive research, testing, and feedback. We may receive commission from links on our website, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted. You can find a complete list of our partners here.

    Refinancing Parent Plus Loans: Everything You Need to Know

    Cait Williams By Cait Williams
    Cait Williams

    Cait Williams is a Content Writer at Scholarships360. Cait recently graduated from Ohio University with a degree in Journalism and Strategic Communications. During her time at OU, was active in the outdoor recreation community.

    Full Bio

    Learn about our editorial policies

    Reviewed by Caitlyn Cole
    Caitlyn Cole

    Caitlyn Cole is a college access professional with a decade of experience in non-profit program and project management for college readiness and access organizations.

    Full Bio

    Learn about our editorial policies

    Edited by Maria Geiger
    Maria Geiger

    Maria Geiger is Director of Content at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania.

    Full Bio

    Learn about our editorial policies

    Posted: September 26th, 2023
    Mother tries to refinance her Parent PLUS loans

    You may have thought that taking out loans was the hard part, but now that you’re looking at paying them back, it can feel even more daunting than when you originally took them out. However, if you take the time to read this article and keep your loan information organized, you’ll be more confident paying back, refinancing, and doing anything else with your loans!

    For today, let’s talk specifically about what refinancing your Parent Plus loans looks like!

    What are Parent Plus loans?

    Before we dive into anything too complex, let’s start with the very basics. What is a Parent Plus loan? Very simply put, Parent Plus loans, also known as Direct Plus Loans, are loans that parents can take out on behalf of their children to help pay for their education. Parent Plus loans carry higher interest rates than other types of federal student loans. 

    What is refinancing?

    Refinancing is the process of changing the terms of your loans. This can mean either changing the terms of your loan with your current lender, or having your debt paid off by another lender and starting a new agreement with that lender. 

    Refinancing is not meant to change the total amount you owe; however, it may affect the rates of your loan, which may end up saving you money in the long run. 

    What is consolidation?

    Okay, one more basic thing to go over before we move on. Although this article is not about loan consolidation, it can be important to understand the difference between consolidation and refinancing. Consolidation is the process of combining multiple federal loans, to make one loan. This means that Parent Plus loans can be consolidated with other federal loans. Consolidation isn’t meant to change the overall amount that is owed, but may make things simpler by requiring only one monthly payment instead of several. 

    Refinancing Parent Plus Loans

    Putting the loan in a student’s name

    One reason Parent Plus Loans may be refinanced is to take them out of the parents name and put them into their child’s name. However, while this loan is technically a federal loan, there is no way to refinance this loan in the child’s name and have it remain a federal loan. A parent will need to refinance the loan through a private lender in order to put it in their child’s name. When this happens, private lenders typically require that the child of the loan holder must meet in order to be approved. A parent can help them by co-signing on the new loan, but if the goal is to completely disassociate the parents name from the loan, this will only partially help.

    Lower interest rates

    The current interest rate for Parent Plus Loans disbursed on or after July 1, 2023 and before July 1, 2024 is 8.05%. This interest rate will remain fixed for the lifetime of the loan. While it’s not guaranteed that you will find a lower interest rate from a private lender, it can’t hurt to look. If you are able to find a lower interest rate with a private lender, then refinancing your loan may make sense for you.

    What you’ll lose access to

    While this is not meant to push you one way or the other, it’s important to keep in mind what you will become ineligible for if your loan moves from a federal status to a private status. Private loans are not eligible for programs like Public Service Loan Forgiveness, graduated, and extended repayment plans and loan deferment and forbearance plans. If these are things you are unaware you’ll lose access to, we recommend looking into them before agreeing to move forward with refinancing. 

    How to refinance a Parent Plus Loan

    If you’ve already taken out Parent Plus Loans, then this isn’t your first rodeo with loans. You likely know that you should not refinance a loan with the first person to offer you a slightly lower interest rate. Take your time exploring the various options you have with lenders. 

    You’ll want to explore more than just interest rates when you are looking into new lenders. Make sure to also look at:

    • Repayment plan options
    • Maximum loan amount
    • Credit score requirements
    • Co-signer requirements 
    • Deferment options

    Once you’ve gathered all your loan information and thoroughly checked out all the things listed above, you’ll be able to make an informed decision about what is best. 

    Should you refinance a Parent Plus Loan?

    We can’t say definitively what you should do because every individual situation is different. However, we have put together some questions for you to ask yourself. 

    Questions To Consider

    Questions To Consider

    • What are you trying to accomplish by refinancing your loan?
    • Are you aware of how changing from a federal loan to a private loan will affect your eligibility for programs like the Public Service Loan Forgiveness Program?
    • How will your interest rate and overall total loan amount change by refinancing your loan?
    • Do you have any other federal or private loans?

    While these questions are by no means an exhaustive list, they should help you get the conversation moving. You can also use our student loan refinancing calculator to try to help you decide what your best option is.

    Key Takeaways

    Key Takeaways

    • Refinancing a Parent Plus loan means that your loan will no longer be a federal loan and will instead be considered a private loan
    • Some of the main reasons to refinance a Parent Plus loan are to move the loan into a child’s name or attempt to lower the interest rate
    • Switching from a federal loan to a private loan will affect your eligibility for certain government programs and repayment plans
    • There is no one answer as to whether or not you should refinance your Parent Plus Loan, you should take a careful look at all your options and what this choice entails before making any final decisions

    Frequently asked questions about refinancing Parent Plus Loans

    How do you lower the interest rate on a Parent Plus loan?

    The only way to lower the interest on a Parent Plus loan is to refinance the loan. Interest rates are recalculated each year for Parent Plus loans. This means that whatever the interest rate is when you take out your loan is what it will be for the duration of all your payments on that loan. Should you take out Parent Plus Loans at different times, you will receive different interest rates for those loans.

    What happens to a Parent Plus Loan if my parent dies?

    In the unfortunate event that your parent passes away, the loan will be discharged. The word discharge can be used interchangeably with the words cancelation or forgiveness. In order to have a loan discharged, you will need to provide proof of death, which usually means providing a death certificate. 

    How long do you have to pay off a Parent Plus Loan?

    You’ll generally have between 10 and 25 years to pay off Parent Plus Loans. How long it takes you to repay your loan within that time frame depends on the repayment plan that you have set up. Your options for repayment plans include a standard plan, a graduated repayment plan, and an extended repayment plan. Keep in mind, however, that should you refinance your loan, you will lose access to these payment plans and will be subject to whatever payment plan you and your private lender agree to.

    3 reasons to join scholarships360

    • Automatic entry to our $10,000 No-Essay Scholarship
    • Personalized matching to thousands of vetted scholarships
    • Quick apply for scholarships exclusive to our platform

    By the way...Scholarships360 is 100% free!

    Join For Free