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Ask Jeni: Can I Transfer my Parent PLUS Loan to my Child?

coaching : January 22, 2019

Personal Finance PLUS Loan Financial Aid College Debt Educational Debt Blog
Ask Jeni: Can I Transfer my Parent PLUS Loan to my Child?

I have a Parent PLUS Loan in my name for one of my children.  How can I change the loan to put it 100% in my child’s name, removing my name completely? Are there several choices?  Or only a few?

 

Refinancing is only way to transfer ownership of a Parent PLUS loan from you to your child. To do this your child must refinance your Parent PLUS loan into their own name. Unfortunately, there is no way to transfer the Parent PLUS loan to your child’s name and keep it a federal student loan. Refinancing the Parent PLUS loan will make it a private student loan, so it won’t be eligible for the same federal benefits or any federal loan forgiveness programs.

 

The major federal benefits that would be lost by refinancing a Parent PLUS Loan are

  • Eligibility for the Income-Contingent Repayment (ICR) plan which is the only income-driven repayment plan Parent PLUS loans are eligible for

 

  • Eligibility for loan forgiveness under Public Service Loan Forgiveness (PSLF) if working in eligible employment, and eligibility for Income-Driven Loan Forgiveness.

 

* To switch to the ICR plan you would need to contact your student loan servicer, consolidate your loan, and complete an income-driven repayment plan application. 

 

Only a few refinancing companies allow your child to refinance the Parent PLUS loan into their name. Here are some of the refinancing companies that allow this: ELFI, LaurelRoad, CommonBond, and SoFi.
 
 
Here is some information about refinancing to consider.
 
 

Borrowers who get the most competitive interest rates generally have

 
  • A good to excellent credit score

 

  • High income relative to student loan debt

 

  • Must be refinancing at least $15,000 of student loan debt

 

  • Steady and predictable income

 

If you and your child decide refinancing is the best option here are some ideas for getting started.

 

 

Start comparing interest rates among lenders

 

  • You can use the Credible Marketplace in the Tuition.io wellness portal to shop for more than one interest rate at a time.

 

  • The other option is independently going to different sites and filling out their rate estimators. The refinancing companies that typically have lowest interest rates are Earnest, ElFi, and SoFi.

 

  • These interest rate estimators do pull a soft credit check and require a decent amount of income and asset information to give accurate estimates.

 

Once you have rate estimates that meet your needs it’s time to submit formal applications

 

  • I advise borrowers to submit applications to the two companies with the lowest interest rate estimates

 

  • The formal applications will pull a hard credit check and show up on the credit report

 

  • Once you have official offers from the refinancing companies, I suggest getting a little competition going between companies because you may be able to squeeze out a little lower interest rate. It’s the first-time student loan business is a little competitive so take advantage!

 
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