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How to Refinance Your Parent PLUS Loans

Congratulations, parents—that bundle of joy you brought home more than two decades ago has now graduated college or earned his or her professional degree.

If you borrowed with the Parent PLUS loan program, you are not alone. Millions of families have used federal loans aimed at parents to help pay for their children’s education, according to the Department of Education.

However, these are among the most expensive federal loans for borrowers. If you borrowed federal Parent PLUS loans in over last four years, your loans likely have interest rates that range from 6.41% to 7.90%, plus the origination fees.

The good news is that you are eligible to refinance your federal loans once your child is within six months of graduation.  

Parent PLUS loans accrue interest from origination, and payments typically start right after the loan has been disbursed.  If you deferred payment when you took the loans, keep in mind that your repayment for Parent PLUS loans starts six months after your student has been out of school.

Check our student loan calculator to compare your rates.

Why refinance your Parent PLUS loans?

With refinancing, you take one new loan to pay off some or all of your existing loans. By refinancing into a no-fee private loan, you can access rates starting at 2.13% for a variable loan and 3.50% for fixed-rate loans.

To give you an idea of savings, let’s say you borrowed a total of $80,000 in Parent PLUS loans between 2012 and 2016 and have an average rate of 7.09%. You’ll be on the hook for more than $930 per month with a standard 10-year term for these loans.

If you refinance that $80,000 student debt from a rate of 7.09% to 4.0%, for example, you can shave $120 off your monthly student loan bill on the same term—or more than $14,000 over the life of your loan.

At Earnest, we also offer the ability to customize your new loan terms based on a budget that works for you. Earnest’s Precision Pricing feature allows you to customize your new loan to fit your budget and needs.

By stretching out your term beyond 10 years, you can further lower your payments—or if you want to accelerate paying off this debt, you can shorten the term and make higher payments. 

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