Parent PLUS loans are a type of federal education loan that’s made out only to parents of undergraduate students. Students themselves cannot apply for these loans although the funds are being used towards their college costs.

The big benefit of these loans is that they have a larger annual limit as compared to other federal student loans. Parents can apply for up to the full cost of attendance minus other forms of aid received. There’s no aggregate loan limit.

The downside of Parent PLUS loans is that they cost much more than other types of federal student loans. They have higher rates of interest and higher loans fees too. Together, these costs make Parent PLUS loans very expensive. One way to lower the cost of these loans is by refinancing. This is relatively easy to do provided that you meet lenders’ refinancing requirements.

You have two options when refinancing Parent PLUS loans. You can refinance in your own name or you can transfer the loan in the student’s name. There is a slight difference in requirements between the two options.

Requirements For Parent PLUS Loan Refinance In Your Own Name

The exact interest rates and requirements for refinancing Parent PLUS loans in your own name will vary among lenders. However, the basic requirements remain the same.

General requirements for parent PLUS loan refinance include:

Good credit – This is the most important criterion for refinancing any type of loan including Parent PLUS loans. Lenders prefer to deal with responsible borrowers who are more likely to repay their money back on time. The only way to determine this is by checking applicants’ credit scores. A high credit score is indicative of a history of on-time payments. Having a high credit score makes approval much easier and may even earn you a lower interest rate. 

Low-debt-to-income ratio – The debt-to-income ratio is the amount of debt you have compared to how much you earn every month. Before lenders approve you for refinancing, they want to make sure that you have sufficient income to pay off all debts. A low debt to income ratio indicates that your income can comfortably accommodate all your debt payments. You’ll find it difficult to get approved if you don’t meet this requirement.

Steady income – Do you have a job that pays a regular monthly income or does your income fluctuate every month? Fluctuating income makes lenders wary. What if you don’t earn enough over a couple of months and can’t afford the repayments? Lenders prefer to avoid these scenarios and are less likely to approve your refinancing request without proof of steady income.

Requirements For Parent PLUS Loan Refinance In Your Student’s Name

If you wish to transfer the refinanced loan in the student’s name, the student will have to meet the lender’s refinancing requirements. They will need to have good credit, a low debt-to-income ratio, and a steady income. If they don’t meet the requirements on their own, they may get approved with a creditworthy cosigner. A creditworthy cosigner is one who meets the lender’s refinancing requirements.