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Can You Refinance Parent PLUS Student Loans?

When prospective college students don’t qualify for enough federal funding, a supportive parent may step in to cover the financing gap. The Department of Education’s Direct PLUS Loan program allows parents to take out a federal student loan on their child’s behalf to cover any remaining education expenses.

While this is a popular solution to soaring education costs – more than 3 million parents are currently repaying PLUS loans – it also leaves parents with a major portion of their kids’ student loan debt. And, Parent PLUS loans come with a much higher interest rate than other federal student loans.


Benefits of a Parent PLUS Loan Refinance

Refinancing your Parent PLUS student loan may help you to:

  • Save hundreds or even thousands by securing a lower rate – sometimes less than half your current rate – which means more money for retirement, home improvements or your next vacation.
  • Shorten your term to pay off the student loan debt faster.
  • Extend your term for lower monthly payments.
  • Simplify your payments through student loan consolidation (if you took out PLUS loans for more than one child).

And, because you’re refinancing your own loan, your child’s credit and finances won’t affect your eligibility. Learn more here.


To get an idea of how much you could save by refinancing, consider the hypothetical scenario below. You’re refinancing outstanding Parent PLUS loan debt of $20,000 and replacing the original 7.0% interest rate with a low 2.62% APR* rate and a shorter five-year term:

  Before Refinancing After Refinancing
Loan Balance $20,000 $20,000
Term 10 years 5 years
Rate (APR) 7.0% 2.62%*
Total Interest $7,866 $1,360
Savings   $6,506


You can save even without changing the term. In this example, you’re refinancing outstanding Parent PLUS loan debt of $40,000 and replacing the original 7.0% interest rate with a low 3.04% rate with payments over 10 years:

  Before Refinancing After Refinancing
Loan Balance $40,000 $40,000
Term 10 years 10 years
Rate (APR) 7.0% 3.04%*
Total Interest $15,680 $6,438
Savings   $9,294

* Rate comparison for illustration purposes only. Available rates and terms may vary.


Is Refinancing Right for You?

You may be a good candidate for refinancing if your loan balance is $5,000 or more, you have a credit score of 660 or higher and you have a steady source of income.

Just like other federal student loans, Parent PLUS loans offer a few unique benefits for those who qualify – including opportunities for deferment, forbearance or extended repayment periods. These can be valuable options to help you manage loan payments when money is tight, and private loans don’t offer these benefits. Be sure you’re comfortable doing without these features before you choose to refinance parent PLUS loans.


How to Refinance Your Parent PLUS STUDENT Loan

When you’re ready to get started, the refinancing process is the same as for other student loans:

1. Apply: Complete your online application – it will take about 15 minutes. You will also need to upload supporting documents like the original loan document and some personal financial documents.

2. Accept offer: We’ll review the application within two business days and send you a loan offer via email. You can review terms, ask us questions and then accept the offer online with an electronic signature.

3. Finalize loan: After a three business-day cancellation window, we’ll finalize everything and send payment to your PLUS Loan lender(s). Your old loan should be paid in full within seven business days.


Easy Refinancing & Big Savings

Find out how easy and fast it is to refinance your Parent PLUS loan at USC Credit Union. Members who refinance their student loans with us save an average of $14,752.

Not a member? Not a problem. If you live, work, worship or go to school in the city of Los Angeles or Orange County, you’re eligible for membership! Learn more.

*Terms and Conditions: For both loans, you will be required to review the Application Truth in Lending Disclosure prior to submitting an application. The minimum loan amount is $5,000. Your interest rate will be determined by your credit score or your cosigner's, whichever is greater. Membership is required. Must qualify for USCCU membership and membership fee may apply; please call (877-670-5860) or visit to confirm eligibility. Must be 18 years old or older. Must pass Chexsystem. All accounts are subject to approval process. Terms and Conditions Apply. USC CREDIT UNION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident and meet USC Credit Union's underwriting requirements. This information is current as of October 1, 2017 and is subject to change. 

Variable Rate: 2.62% annual percentage rate (APR) effective 10/1/2017 – 12/31/2017. 60 monthly payments of $17.91 per $1,000 borrowed. Borrowing $20,000 at 2.62% accrues $1,360.39 in interest during a 5-year repayment term. These monthly payments and accrued interests are for illustration purposes only. If approved for a loan, the variable interest rate offered will depend on your credit history and the Credit Union’s underwriting standards. Variable rates from 2.62% - 6.37% APR (with AutoPay). Rate is variable and subject to change. Interest rates on variable rate loans are capped at 19.15%. Lowest variable rate of 2.62% APR assumes current 3-month LIBOR rate of 1.32% plus 1.55% margin and subtracting the 0.25% AutoPay discount. For the variable rate loan, the 3-month LIBOR index will adjust quarterly and the loan payment will be re-amortized and may change quarterly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The above figures assume no changes in the LIBOR index, no pre-payments, no additions to the loan principal, and all payments made in a timely manner over the life of the loan. For further information on rates and costs for the Variable Rate Student Loan Refinance, see the Application Truth in Lending Disclosure.

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