February 1, 2021
by Adam Sisson
Parent PLUS Loans are no fun. Paying them off can frustrate your financial plans and the interest they accumulate can be quite nauseating. But there are better and smarter ways to repay Parent PLUS Loans so you can wave goodbye to that annoying debt forever. Here are the top tried-and-true strategies to get rid of Parent PLUS Loans quickly.
Why pay off Parent PLUS Loans faster?
Before setting a goal like paying Parent PLUS Loans more quickly, it’s important to know how it can help you. Although Parent PLUS Loans are taken out for an admirable cause — helping your child afford the college experience they’ve dreamed of — they can be a serious burden on your financial life.
The reason? Parent PLUS Loans often come with one of the worst interest rates of any federal student loan offered by the U.S. Department of Education. The government sets these standardized rates each year and they’re the same for every borrower — regardless of your credit score or debt-to-income ratio. Because of their high rate, Parent PLUS Loans accumulate interest rapidly and relentlessly — making them difficult to manage and pay off on schedule. Plus, by the end of the loan, you end up paying much more than you originally took out.
By focusing your financial efforts on ditching Parent PLUS Loans sooner, you’ll pay much less in interest costs and free up plenty of room in your monthly budget to achieve bigger and better aspirations. Luckily, there are some easy and effective options to help pay Parent PLUS Loans fast.
Why refinance Parent PLUS Loans?
One of the best methods to get rid of Parent PLUS Loans is through student loan refinancing. It’s a quick and simple strategy that’s extremely popular among parents. Here’s why so many people are refinancing their Parent PLUS Loans.
- Save money. Refinancing federal Parent PLUS Loans consolidates your debt into a new private loan — providing the opportunity to qualify for a lower rate. Because private lenders — like PenFed and other financial institutions — take your credit into account, you can be approved for super low rates if you have a strong credit score and a solid reputation for on-time payments. With a better rate, you’ll save on your bills each month and save even bigger over the life of your Parent PLUS Loans.
- Ditch debt faster. By refinancing, you’ll have the ability to select a shorter repayment term. If you can handle the larger monthly payments, a shorter term will allow you to put Parent PLUS Loan debt in the rearview mirror much sooner than planned — meaning you’ll pay much less in total interest accrued.
- Consolidate your loans. Parent PLUS Loan refinancing combines all your student loan debt into a single loan. If you have multiple Parent PLUS Loans or other private student loans, refinancing can streamline and simplify your payments into just one bill with one loan servicer.
- Transfer debt to a child. Parent PLUS Loan refinancing also gives you the chance to transfer your debt into a child’s name. If your child is in a good financial position to handle the payments, refinancing your parent loans to your child may be the fastest and easiest way to get them off your plate.
How to refinance Parent PLUS Loans?
Refinancing Parent PLUS Loans is a straightforward and simple process. To refinance with PenFed, the first step is to check your rate offers through the Find My Rate tool. After completing a quick form with some basic information, you’ll be able to see if you qualify for a refinance — as well as the different rates and terms you can choose from.
Once you select your favorite rate and term, you’ll be taken to PenFed’s refinance application which only takes about 15 minutes to complete. PenFed will then verify your submitted documentation needed for the application. If you are not already a member of the credit union, you’ll need to fill out a PenFed membership application. PenFed makes membership easy — once your loan closes, your membership will be set up for you.
After you receive your final approval, you can pick your final rate and term, review your loan, and e-sign. Then PenFed takes care of the rest — paying off your remaining Parent PLUS Loan debt and setting up your new loan.
What are some drawbacks to consider?
There are two primary drawbacks to keep in mind when refinancing Parent PLUS Loans.
- Not everyone qualifies. To be approved for a refinance — especially one with a better rate — you’ll need a high credit score and low debt-to-income ratio. But if you can’t qualify on your own, you always have the option to add a creditworthy cosigner to your application which can increase your odds of getting a favorable refinance offer.
- You’ll lose federal loan benefits. Since refinancing federal Parent PLUS Loans converts them into a new private loan, you’ll lose federal student loan benefits offered by the U.S. Department of Education. That includes access to the Public Service Loan Forgiveness program, income-driven repayment plans, and general forbearance and deferment options. If one or more of these federal benefits is important to you, refinancing may not be the right solution.
What are other ways to repay Parent PLUS Loans quickly?
If refinancing doesn’t sound like the right fit for your needs — or you’d like to combine refinancing with additional useful strategies — here are other smart solutions for paying Parent PLUS Loans fast.
- Make larger payments. If you have the extra funds available to do so, making bigger monthly payments toward your Parent PLUS Loans can make a big dent in your debt. By paying more than what you owe consistently, you can drastically cut down your principal balance faster while paying less in total interest.
- Use cash windfalls. Windfalls — like tax returns, work bonuses, or monetary gifts — can be excellent sources for paying down your Parent PLUS Loans. Those unexpected boosts of money can be put right toward your principal — and since they’re extra funds outside of your monthly finances, you won’t necessarily miss them in your budget.
- Get a side income. Need more cash to be comfortable with spending more toward your loans? The gig economy is rapidly growing and becoming more accessible. You can provide professional skills on certain sites that specialize in selling homemade crafts or household items.
Refinance Parent PLUS Loans with PenFed
If you’re serious about paying off your Parent PLUS Loans fast, refinancing is one of the most popular and valuable solutions. For those who qualify, Parent PLUS Loan refinancing can be the perfect option for ditching that debt for good — while saving big on interest costs. With PenFed, the process is simple, quick, and effective. Start by finding your rate and choosing the refinance option that’s best for your needs.
PenFed is federally insured by NCUA.