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.
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:
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Mark Kantrowitz is a nationally-recognized expert on student financial aid, scholarships and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make informed decisions about planning and paying for college.
Mark writes extensively about student financial aid policy. He has testified before Congress and federal/state agencies about student aid on several occasions.
Mark has been quoted in more than 10,000 newspaper and magazine articles. He has written for the New York Times, Wall Street Journal, Washington Post, Reuters, Huffington Post, U.S. News & World Report, Money Magazine, Bottom Line/Personal, Forbes, Newsweek and Time Magazine. He was named a Money Hero by Money Magazine. He is the author of five bestselling books about scholarships and financial aid, including How to Appeal for More College Financial Aid, Twisdoms about Paying for College, Filing the FAFSA and Secrets to Winning a Scholarship.
Mark serves on the editorial board of the Journal of Student Financial Aid and the editorial advisory board of Bottom Line/Personal (a Boardroom, Inc. publication). He is also a member of the board of trustees of the Center for Excellence in Education. Mark previously served as a member of the board of directors of the National Scholarship Providers Association.
Mark is currently Publisher of PrivateStudentLoans.guru, a web site that provides students with smart borrowing tips about private student loans. Mark has served previously as publisher of the Cappex.com, Edvisors, Fastweb and FinAid web sites. He has previously been employed at Just Research, the MIT Artificial Intelligence Laboratory, Bitstream Inc. and the Planning Research Corporation.
Mark is President of Cerebly, Inc. (formerly MK Consulting, Inc.), a consulting firm focused on computer science, artificial intelligence, and statistical and policy analysis.
Mark is ABD on a PhD in computer science from Carnegie Mellon University (CMU). He has Bachelor of Science degrees in mathematics and philosophy from MIT and a Master of Science degree in computer science from CMU. He is also an alumnus of the Research Science Institute program established by Admiral H. G. Rickover.
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