Tag: Parent PLUS

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College Students and Recent Grads, Reviews, Student Loan ReFi

SoFi Parent PLUS Loan Refinance Review

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Updated August 16, 2017

Are you a parent who wanted to help your child finance his or her education, and ended up taking out more loans than anticipated? Many parents find themselves in a precarious situation as they try to plan for retirement and while balancing student loan debt.

If you’re looking to save on the amount of interest you’re paying, SoFi’s Parent PLUS loan refinance program may be right for you.

Details of the Parent PLUS Loan

You can refinance a minimum of $5,000 under SoFi. Fixed rates range from 3.375% to 6.750% APR and variable rates range from 2.815% – 6.490% APR (these rates assume you enroll in autopayment).

Terms of 5, 7, 10, and 15 years are available. Variable rates on terms of 5, 7, and 10 years are capped at 8.95%, while the 15 year term is capped at 9.95%.

An example payment looks like this: if you refinance $10,000 on a 5 year term with a fixed APR of 5.49%, your monthly payment will be $190.97 and you’ll pay a total of $11,457.93 over the life of the loan. If you refinance $10,000 on a 5 year term with a variable APR of 4.2%, your monthly payment will be $185.07 and you’ll pay a total of $11,104.43.

How Does the Parent PLUS Loan From SoFi Compare to a Federal PLUS Loan?

The interest rate for Federal Direct PLUS Loans disbursed on or after July 1st, 2015 and before July 1st, 2016 is 6.84%. During much of the 2000s, interest rates were higher. Currently, interest rates are fixed – variable rates are unavailable.

Most people are looking to refinance to save money, and SoFi offers very competitive rates compared with the Direct PLUS Loan, especially on variable rates.

While there are no fees to refinance, you should calculate your estimated savings before going through the process. Be aware if you do refinance, you’ll lose out on certain benefits that come with having Federal student loans, such as deferment, forbearance, and various repayment options.

PLUS loans made to parents are eligible for the Graduated or Extended Repayment Plans, and Direct PLUS loans are also eligible for forgiveness. In some cases, PLUS loans can be discharged due to the death of the borrower (or student).

Private loans often don’t extend these same benefits. In fact, SoFi explicitly states on its legal page that this loan “is not discharged in the event of death or permanent disability of the borrower or student on whose behalf the loan is taken out.”

Eligibility Requirements

You must be a U.S. citizen or permanent resident and employed to be approved. SoFi is unable to lend in Nevada, and variable rates aren’t offered in Illinois, Ohio, or Tennessee. The loans must have been used to obtain at least a Bachelor’s degree with an eligible school as well.

There are no specific credit score requirements as SoFi tries to take a broader view of borrowers. It focuses on income and credit history instead.

Application Process and Documents Needed

The application process to refinance a PLUS Loan with SoFi is easy and can be done completely online. The application takes around 15 minutes to complete, and you’ll know whether or not you qualify by going through the pre-approval process first. During this portion of the application, a soft credit inquiry is used. If you decide to move forward with the loan offered to you, a hard credit inquiry will be used.

You’ll be asked to upload a few documents, so it’s a good idea to have the following ready to go:

  • Proof of residence – ID with matching address, otherwise a utility bill dated within the last 60 days is okay
  • Proof of income – most recent pay stubs
  • Proof of citizenship – a passport or birth certificate can be provided
  • Verification of loans – most recent loan statements for the loans you’re refinancing

Once you submit this documentation, SoFi’s review team gets to work on evaluating your loan. If no other documentation is needed, reviews can take anywhere from 2 to 3 weeks to complete.

The Fine Print

There isn’t an origination fee or application fee, and there are no prepayment penalties. Rates are determined on a number of factors, including the term you choose, your income, and your credit history.

There are late fees associated with the loan. The Parent PLUS Refinance program is currently offered through SoFi’s lending partner, Mohela, and it assesses any fees owed. When you receive the paperwork for the loan, the fees can be found under the disclosures.

Repayment Assistance Options

If you’re struggling to repay the loan after refinancing with SoFi, we recommend you contact a representative and make them aware of the situation. The worst thing you can do with any loan is not make a payment.

SoFi offers unemployment protection on a case-by-case basis, during which payments can be paused for a period of 3 to 12 months.

Pros and Cons of SoFi Parent PLUS Loan

Pro: SoFi offers much better rates than the 6.84% fixed rate that comes with Direct PLUS loans. If you have a higher interest rate – around 8% – you’ll stand to benefit even more.

Con: As we mentioned, refinancing means losing out on benefits associated with Federal student loans. If you’re not as concerned about needing repayment assistance, the savings might be enough to make refinancing worthwhile.

Pro: SoFi also offers variable interest rates, whereas the most recent Direct PLUS loans don’t. Variable rates can be tricky, though – SoFi says rates may change on a monthly basis. If you value stability and peace of mind, variable rates may not be for you. If you’re trying to pay off your balance quicker, and a lower interest rate would help, then it might be worth considering this option. 

Con: You may have to extend the repayment term to get a lower monthly payment, as SoFi offers terms up to 15 years. Unfortunately, this increases the amount of interest you’ll pay over the life of the loan. It’s important to use a calculator to estimate how much your savings will be to make sure refinancing is worth it. For example, if you have less than 5 years remaining on your loan, refinancing may not save you a lot of money.

Pro: SoFi offers unemployment protection, and you can also take advantage of SoFi’s career assistance program. If you or your child is experiencing trouble finding employment, it will connect you with its network of alumni and give you tools and tips to succeed in your job search.

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Other Parent PLUS Refinance Alternative

If you don’t qualify with SoFi, you can try these lenders that also offer refinancing options:

CommonBond: Fixed APRs range from 3.35% to 6.74%, and variable APRs range start at 2.80%, and terms offered are 5, 10, 15, and 20 years. CommonBond also has hybrid APRs. Only a 10 year term is offered with this choice; it starts off as fixed for 5 years, and changes over to variable for 5 years. There are no origination fees or application fees, no prepayment penalty, and CommonBond actually allows you to transfer your loan to your child (which isn’t allowed with Federal loans). You can borrow a maximum of $110,000.

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Citizens Bank: Citizens Bank refinances Parent PLUS and Direct PLUS loans through its Education Refinance program. The minimum amount you can refinance is $10,000 and up to $90,000 for Bachelor’s degrees and below, $130,000 for graduate and doctoral degrees, and $170,000 for professional degrees. For a Bachelor’s degree and above, you must have made 3 consecutive monthly payments to refinance. For anything less than a Bachelor’s degree, you must have made 12 consecutive monthly payments. The loan you’re refinancing must be in repayment status and can’t be enrolled in an Income-Based Repayment plan. Fixed APRs start at 6.24%. Terms of 5, 10, 15, or 20 years are offered. You need a minimum income of $24,000 to qualify.

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Be sure to shop around as there are other lenders out there that will refinance PLUS loans – you want to make sure you’re getting the best rates and terms available to you so you can save the most. Shopping around within 30 days will only count as one credit inquiry, so your credit won’t get penalized heavily. Take advantage of this and lessen the burden of student loan payments so you can focus on saving for your future.

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Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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College Students and Recent Grads, Reviews

Review: DCU Parent PLUS Loan Refinancing

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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PLUS loans are federal student loans that can be used by graduate students, professional degree students, or parents of dependent undergraduate students to help pay education expenses. Direct PLUS loans are made by the U.S. Department of Education through schools that participate in the Direct Loan program.

With Direct PLUS loans, the U.S. Department of Education is the lender. Borrowers must not have an adverse credit history with delinquencies, bankruptcies, or tax liens, and the maximum loan amount that can be received is the cost of the student’s attendance (calculated by the school) minus any other financial aid received. In order to receive a Direct PLUS loan, you must complete the Free Application for Federal Student Aid (FAFSA).

This might sound like a mouthful, but the criteria for obtaining a PLUS loan is actually pretty flexible, which can be to a family’s determinate as there is no underwriting done to determine if the family can actually afford the loan. This means, it’s possible for parents to borrow $200,000 while only earning $50,000 as a household. This could be in addition to a mortgage and other existing debts. Everyone receives the same interest rate on PLUS loans regardless of their creditworthiness. The current interest rate on PLUS loans first disbursed on or after July 1, 2015 and before July 1, 2016 is 6.84%. This is a fixed interest rate for the life of the loan.

Recently, there has been a rise in companies willing to refinance PLUS loans to help you save money with a lower interest rate. But you do have to meet stricter underwriting criteria. One lender such lender is Digital Federal Credit Union (DCU).

An Overview of DCU PLUS Loan Refinancing

DCU PLUS Loan Refinancing can be used to refinance or consolidate your existing PLUS loan(s) between $5,000 and $100,000. DCU’s PLUS Loan Refinancing rates are as low as 5.99% APR, which can help you pay off your loans faster and save money on interest if you refinance. Consolidation is also a good way to reduce your monthly student loan payments into one convenient payment rather than having to make multiple payments each month.

With DCU, you can quality for a lower rate with a .25% interest rate reduction if you enroll for automatic electronic payments. They also offer a graduated repayment option that will help lower monthly payments for the first two years of your repayment term. Finally, DCU charges no pre-payment fee. This means you are able to pay off your loan at any time with no penalty.

Payment terms offered by DCU for PLUS loan refinancing and consolidation include a 5, 10, or 15 year term.

[5 Options to Refinance a Parent PLUS Loan]

Application and Qualification Process

In order to refinance or consolidate PLUS loans with DCU, you have to meet income, employment history, and credit requirements, plus you must be in active repayment on your existing PLUS loans from an approved school. Exact qualifications for income, employment history, and credit requirements are not shared on DCU’s website, but you can easily apply online to see if you qualify.

Fees and Gotchas

Although DCU charges no pre-payment fee or origination fee for PLUS loan refinancing, the interest rate you receive may be higher than 5.99% depending on the repayment term you select. The current rates are:

  • 5-Year Repayment Term – 5.99% APR

Thus you should calculate your potential savings before considering refinancing your PLUS loans.

Pros and Cons

Obviously the biggest pro to refinancing your PLUS student loans with DCU, or any other private lender, is the opportunity to save on interest and potentially pay your balance off sooner.

But it’s also important to remember that no matter who you refinance your federal student loans with, you may be giving up some benefits and protections that are only available to federal loans. For example, an Income-Contingent Repayment (ICR) Plan allows borrowers with federal student loans to make monthly payments capped at a portion of their discretionary income. This is actually available to Parent PLUS loans once the loan has been consolidated. This is an option that is not available to you if you refinance your federal student loans with a private lender.

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PLUS Refinance Alternatives

How does DCU compare to other available options for refinancing PLUS student loans?

Laurel Road (formerly known as DRB) offers PLUS loan refinancing as well. Laurel Road’s interest terms are more attractive than DCU’s with fixed interest rates between 3.50% and 6.75% APR. This is quite a bit lower than DCU’s fixed rate on longer-term loans. Additionally Laurel Road will refinance 100% of your PLUS loans with no cap on the amount (if you qualify). Laurel Road also offers some benefits that DCU doesn’t if you face financial hardship.

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Another option is SoFi with fixed interest rates range from 3.38% to 6.74% APR (if you sign up for auto-pay). SoFi also offers benefits like unemployment insurance if you get laid off. Like DCU, there are no application, origination, or prepayment fees.

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Who Will Benefit Most from a DCU PLUS Loan Refinance?

Graduate and professional students, or parents of undergraduate students can benefit from a DCU PLUS loan refinance, especially if they opt for a 5-year term with automatic payments in order to get the lowest interest rate.

Keep in mind that opting for a longer loan term with DCU will result in a higher interest rate, which could negate any interest savings you hoped to achieve by refinancing your PLUS student loans.

Kayla Sloan
Kayla Sloan |

Kayla Sloan is a writer at MagnifyMoney. You can email Kayla at Kayla@magnifymoney.com

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