Can You Transfer a Parent PLUS Loan to a Student?
No, you cannot transfer a federal PLUS loan to another person, including the student whose education was paid by the loan. However, you may be able hand off the loan through refinancing.
If you're considering taking out a Parent PLUS loan for the 2020-2021 school year, it might be wise to check out your other options first. If you already have a PLUS loan in your name, here's what you need to know to transition the debt to your child's name.
You can't transfer, but you can refinance
Unfortunately, regardless of your financial situation, Parent PLUS loans cannot be transferred into your child’s name, even after graduation. According to the rules set by the federal Direct Loans program, parents alone are responsible for paying back these loans.
That doesn’t mean you’re out of luck, however.
Several private lenders offer the option to refinance a Parent PLUS Loan in the student’s name once they have graduated—assuming the child is willing to apply for the loan and can pass a credit check without a cosigner.
If your child is approved for a refinance, the Parent PLUS loan you took out through Direct Loans will be paid off and a new loan will be created under your child's name through a private bank. Most reputable private lenders do not charge origination fees for refinancing, so you'll be able to transfer the loan with no added costs.
The fine print
Keep in mind that some things about the loan will change in the refinancing process. As a private loan, the loan won’t be eligible for the same repayment and deferment options offered by federal loans. However, many private lenders offer a variety of repayment plans. Some even include options for forbearance.
A refinanced private student loan also won't be eligible for federal student loan forgiveness programs, although loan forgiveness for parent loans is quite rare anyway.
One serious upside to refinancing: Your child may have an opportunity to score a lower interest rate. Private loans are offered at both variable and fixed interest rates. With current historically low interest rates, many lenders are offering refi deals at rates far below what you're probably paying on your PLUS loan.
If your Parent PLUS loan payments are dragging you down financially, you don’t have to be limited by federal loan stipulations. Seek out a private lender who can refinance the loan in your child’s name to lighten your financial load.
See our picks for the best student loan refinancing deals here.