Parent PLUS loans are federal student loans you can take out to help pay for your child’s college education. However, as graduation approaches, you may wonder whether it’s possible to transfer these debts from parent to student.
This guide will explore how Parent PLUS loans work and whether this legal shift of repayment responsibility is actually possible.
How Does a Parent PLUS Loan Work?
Students in need of educational financing often start with federal student loans, as they tend to have the best interest terms. However, there may be additional educational costs to cover after a student has taken out the maximum allowable loans.
In these cases, the student’s parents can apply for a Parent PLUS loan: an unsubsidized loan that can help cover the remaining costs of education. Here are the most significant qualification requirements:
- The student must be a dependent undergraduate.
- The student must be enrolled at least half-time at an eligible school.
- The parents must meet the general eligibility requirements for student aid.
- The loan applicant must be the student’s biological or adoptive parent (or stepparent, in some cases).
- The applicant must have a good credit history (or meet additional criteria if they have poor credit).
It’s important to note that you can’t take out a Parent PLUS loan as the grandparent of a student, even if you’re their primary caretaker. The only exception is if you have legally adopted the student.
Can Parent PLUS Loans Be Transferred to the Student?
Under federal law, a Parent PLUS loan cannot officially be transferred from a parent to a student. When you take out a PLUS loan, you agree to be the sole legal borrower for the life of the debt.
The Department of Education does not provide a process to shift that legal responsibility to your child, regardless of their graduation status or financial ability to pay.
While your child can certainly help you make the payments, the debt will remain in your name and on your credit report until it is fully resolved.
Is There Any Way to Get Out of a Parent PLUS Loan?
While transferring a Parent PLUS loan to a student directly isn’t possible, you may be able to get out of the loan in a roundabout way. However, this method requires the student’s permission and cooperation.
Here’s how to transfer a Parent PLUS loan to the student via refinancing:
- Find a private lender that allows you to refinance Parent PLUS loans.
- Ask the student to apply for refinancing.
- Wait for the lender to evaluate the student’s income, credit score, and other qualifications.
However, depending on the student’s financial situation, the lender may require a cosigner. Cosigning the loan means that if your child stops repaying, you’ll become liable for the debt again.
Consequently, you may end up having to repay the loan balance anyway. In addition, if the refinance comes with a higher interest rate than the original loan, you could end up paying more over time.
The Bottom Line
Parent PLUS loans stay with the parent who took them out, even after the student graduates. There is no way to officially transfer that debt to the student through the federal loan system.
Refinancing can shift repayment to the student, but it comes with risks and usually means giving up federal protections. Before making any changes, talk openly with your child about repayment and its long-term impact.
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