However, before going any further, it is crucial to point out that just because you can transfer the debt, it does not mean that you should transfer the debt.

In this article, I’ll first explain how the process works and the steps to get it done. Then I’ll explain why it is a potentially risky move.

The Process to Transfer Parent PLUS Loan Debt to Children

When a Parent PLUS loan is issued, the debt belongs only to the parent. The child for whom the loan was used has no legal obligation to repay the loan.

Additionally, the federal government provides no avenue to transfer the debt from the parent to the child. The parent owes the money until it gets paid in full.

This is where our workaround enters the picture. Some student loan refinance lenders will allow the child to refinance the debt.

When you refinance a loan, the refinance lender will create a new loan with new loan terms. The money from that loan is used to pay off an older loan. In this case, the child gets a new refinance loan, and the money pays off the Parent PLUS loan.

After the refinance, the parent’s loan and debt obligations are eliminated, and it becomes the responsibility of the child to repay the loan.

Lenders that Allow Children to Refinance Parent PLUS Loans

The following lenders will help families transfer Parent PLUS debt from the parent to the child:

Lender	Interst Rates	Loan Length
	4.69%* – 9.99%	$5,000 – No Max
Application + Up to $500 Bonus	Splash Financial Review: Splash has competitive rates, but they start slightly higher than the top lenders. Splash also offers unique 8 and 12 year repayment terms.
	4.86% – 8.44%	$10,000 – No Max
Application + $150 Bonus	ELFI Review: ELFI routinely offers excellent interest rates. Even though ELFI is new, it is the product of a regional bank that has been in business for decades.
	4.49% – 9.99%	$5,000 – No Max
Application	SoFi Review: SoFi is the biggest name in student loan refinancing for a simple reason – their rates are reliably among the best on the market.

Many other lenders, such as Earnest, will refinance Parent PLUS loans, but they will not allow the parent to transfer the debt to the child.

Parent PLUS Refinance Limitations

It’s worth pointing out that the refinance lenders are private companies out to make a profit. Their business model depends on finding borrowers likely to repay the loan.

Additionally, not all refinance lenders will allow children to repay Parent PLUS loans.

Combining these two factors means this option will not work for all families. Getting approved for a new loan will be challenging if your child struggles financially or has a troubled credit history.

Additionally, refinancing federal debt into a private loan comes with significant concerns.

Transferring Parent PLUS Loans to Your Child is Risky

Compared to other federal student loans, Parent PLUS loans are not great. They have limited repayment options, and qualifying for forgiveness has an extra layer of difficulty.

However, they are still federal loans. As federal loans, borrowers can access federal perks like income-driven repayment and loan forgiveness.

Private refinance loans don’t offer these protections.

If your child refinances and then loses their job or faces a financial emergency, the private lenders will be less accommodating. Some may offer a temporary deferment or hardship forbearance, but the debt eventually must get paid in full.

Sherpa Tip: Parent PLUS loans are a headache at times, but they work nicely for borrowers who are living on social security.

Even at a higher interest rate, keeping a Parent PLUS loan with the parent can be the most affordable path to debt elimination.

Other Options for Assistance from a Child

Rather than refinancing the Parent PLUS loan, a child can assist with repayment in many other ways.

For starters, the child can help their parent navigate the federal student loan consolidation process so that the parent can qualify for the Income-Contingent Repayment Plan. They can also help their parent with the yearly income documentation required for IDR repayment.

Additionally, the child can help with payments even if the debt isn’t in their name.

These fixes won’t help the parent’s debt-to-income ratio, but they can still make living with a Parent PLUS loan more tolerable.

When Refinancing a Parent PLUS Loan Makes Sense

I usually tell borrowers considering a refinance of their federal loans only to do it if they are reasonably certain they won’t need any of the federal perks, protections, and benefits.

I’d take that advice a step further when it comes to transferring Parent PLUS loans to children. If the parent may qualify for forgiveness or if the child might struggle with the private refinance loan, the transfer becomes quite dangerous.

However, if repayment in full is a certainty and the only question is how much gets spent on interest along the way, refinancing can make sense. Parent PLUS loans have the highest interest rates of all federal loans. Thus, there is potential for a dramatic reduction in interest spending.

Transferring the debt is also an excellent way for a grateful child to remove a burden off their parent’s plate. Additionally, if mom or dad wants to qualify for a mortgage, transferring the debt can help.

If refinancing to transfer a Parent PLUS loan to a child is the right move for your family, you’ll want to focus on the short list of refinance lenders that offer this service.

The post How to Transfer Parent PLUS Loans to Your Child appeared first on The Student Loan Sherpa.

For most borrowers, the best-case scenario is a minor inconvenience. However, if things go poorly, borrowers may miss payments or fall for a scam.

As someone who has dealt with this issue before, I’ve put together the following guide for borrowers facing a student loan servicer change.

Making Sure the Student Loan Servicer Change is Not a Scam

Borrowers are smart to be on the lookout for student loan-related scams.

Because the change in student loan companies is a confusing yet common practice, student loan scammers may try to take advantage of unsuspecting borrowers.

Fortunately, borrowers have several tools available to make sure that the transfer is legitimate.

• Call the original student loan company. If your debt will be sold to another lender or serviced by a different company, your current lender should know all about it.
• Find external verification. These transfers often happen on a large scale, making it a newsworthy event. Many Wells Fargo borrowers recently learned their loans were moving. Wells Fargo shared the news on their website, and many articles on the subject were written.
• Check the federal database. The Department of Education keeps detailed records on federal student loans. This information includes the company assigned to service the loans. If you receive notice that your federal loans are being serviced by someone new, check the federal database to see if it is true.

It’s awful that borrowers have to constantly be on the lookout for scams, but in this instance, verifying legitimacy takes very little time.

Terms and Conditions Stay the Same

The lender that owns the debt may change. The company responsible for collecting bills and answering questions may change. However, the terms and conditions of the student loan do not change.

A student loan is a contract between a borrower and a lender. Lenders cannot just raise rates or change loan terms. If you get moved to a new student loan company, your monthly payment and interest rate should not change.

The only exception is borrowers with variable-rate loans. If the transfer happens at the same time as an interest rate recalculation, borrowers may see a different interest rate or monthly payment.

Steps to Take Before Any Transfer

If you get word that your student loan is on the move, you should jump into action.

• Download copies of all billing statements. If the move happens and the balance looks off, you may need proof of your prior payments.
• Update contact information. If your address or email has changed, you will want to update this info. Missing out on essential communications could lead to missed payments.
• Turn off automated payments. If your bank automatically makes a payment each month, you don’t want that payment to go to the old student loan company. Likewise, your old lender should stop pulling auto-debits, but the smart move is to turn it off so that no mistakes happen.
• Save copies of all lender emails and communications. Once you are with a new student loan company, it will be hard to access old records and conversations. If you save a copy, it might come in handy in the future.

Preventing a Change in Student Loan Servicers

Unfortunately, borrowers usually have little say in whether or not their student loan company changes.

Private lenders routinely sell student debt to other lenders, and the federal government routinely contracts with new servicers. Lenders carefully draft student loan contracts to ensure that they have the right to make these changes.

However, there is one way that borrowers can take control of the situation. If they choose to refinance their student loans, they can essentially pick their next lender and get a lower interest rate or better repayment terms.

Refinancing federal loans with a private lender is a significant risk because borrowers give up the generous federal perks. However, refinancing a private loan is usually a good idea as long as the borrower can find a better interest rate and repayment terms.

At present, the following refinance companies offer the lowest interest rates:

Rank	Lender	Lowest Rate	Sherpa Review
T-1		4.86%	ELFI Review
T-1		4.86%*	Splash Financial Review
3		5.29%	Laurel Road Review

The post Loan Servicer Transfer: Dealing with a Student Loan Company Change appeared first on The Student Loan Sherpa.