Summary: Transferring Parent PLUS loans into the student’s name isn't possible with a Direct Consolidation Loan, but it can be accomplished by refinancing through a private student loan refinance lender.
Can You Transfer a Parent Plus Loan to the Student?
Many parents find themselves in the position of taking out parent PLUS loans to help their child pay for college. But once your child is out of school, you may want them to formally assume responsibility for the debt. This is only possible through a refinanced loan with a private lender . If you keep your loans with the federal program, even if you do a federal Direct Consolidation Loan, you cannot transfer the loans into your child’s name.
Refinancing isn’t just limited to parent PLUS loans. With private student loan refinancing, your child can combine parent PLUS loans, other federal student loans, and private student loans into one new loan in their name.
How to Transfer a Parent PLUS Loan to the Student
If your goal is to transfer parent PLUS loans into your child’s name, you will need to explore refinancing with a private lender. There are many lenders that offer this option. Our Compare Lenders page makes it easy to compare some of the best parent PLUS loan refinance options. There you can view the various benefits and rates offered by different lenders, and easily apply online.
To qualify, your child will have to meet the lender’s criteria for the loan refinance, including a credit check. Often times, recent graduates will need a cosigner in order to qualify for a private student loan refinance; especially if there is limited credit or work history. If your child needs a cosigner to refinance student loans, typical options include a spouse (if applicable) or a family member. A cosigner must be creditworthy , with an established credit and work history.
If you choose to cosign, you will still be responsible for the loans. Look for a lender that offers cosigner release. This allows the primary borrower (your child) to release the cosigner (you) from the loan once they’ve met specific criteria, such as a having made a certain number of consecutive on-time payments, meeting minimum credit requirements, and providing proof of income.
While cosigning on the refinance loan will not release you from your responsibility immediately, if you have a strong credit history, you can help your child get a lower interest rate that will stay with them after you have been released as a cosigner.
Your child, the one who would be completing the refinance, should take this opportunity to examine his or her loan portfolio. Their new private student refinance loan can also include other student loans (federal or private) they would like to combine together.
