Parents who borrowed to put their kids through college now have several options to refinance their federal PLUS loans, including, in some cases, the ability to transfer their debt to those children.
The situation is a sharp turnaround from the period after the financial crisis, when private lenders fled the student loan market and few borrowers were able to refinance their debt to take advantage of lower rates.
Lending began to thaw in 2012 when a few start-ups, credit unions and banks began offering refinancing to student borrowers, said Andy Josuweit, chief executive officer of education loan information site Student Loan Hero.
Some of those lenders – including SoFi, CommonBond, Earnest, Citizens Bank and Darien Rowayton Bank – added PLUS refinancing in the past year. PLUS are low-cost federal loans offered to graduate students or parents of dependent undergrads to pay for post-high school education.
That change seems to have largely flown under the radar of the 3 million parents who have borrowed an estimated $62 billion from the federal PLUS loan program, he said.
“I don’t think a lot of parents know about it,” Josuweit said. “But the odds of getting a refinancing are better if you’re a parent than if you’re a student.”
By Liz Weston