There are several steps to refinance parent PLUS loan consolidation for repayment. Parents borrow a parent PLUS loan to pay for their child’s education. With consolidation, parents can combine multiple federal student loans into one loan. As a borrower, you can refinance the consolidation loan to alleviate financial burdens or to transfer the loan to the student. You can lower your monthly payments, extend payment periods, and lower the interest rate. Here are several steps to refinance parent PLUS loan consolidation for repayment.
Find A Lower Rate
First, find a lower rate when refinancing parent PLUS loan consolidation for repayment. To qualify for a lower rate, you must have good credit and a comfortable income to afford all expenses. These expenses include housing, credit card payments, debt payments and student loans. By refinancing to a lower interest rate, you can save money in interest and become debt-free quicker. Furthermore, there are online resources that can estimate how much you will pay each month. You can calculate how much you can save by refinancing the loan and what your average interest rate could be. Definitely refinance to a lower rate parent PLUS loan consolidation for repayment.
Consider Direct Government Consolidation
After finding a lower rate for credit card payments, consider direct government consolidation. Start by consolidating all parent PLUS loans into a single direct government consolidation loan. This allows you to be eligible for the Income-Contingent Repayment (ICR) plan. The ICR caps monthly payments at 20% of your income for a maximum of 25 years. Additionally, ICR offers student loan forgiveness if there is a balance after 25 years. Furthermore, you should delay your social security benefit claims as it can be counted towards your income. By holding off on the claim, your monthly loan payment is lowered. Certainly, consider direct government consolidation to refinance parent PLUS loans for repayment.
Choose A Different Payment Plan
Additionally, choose a different payment plan. There are three types of federal student loan repayment plans, The Standard Repayment Plan, The Graduated Repayment Plan and The Extended Repayment Plan. Typically, the standard plan comes with a maximum 10 year period, saves you interest over time and has a quicker payoff due to slightly higher payments. The graduate plan has payments increase slowly over the life of the loan. Generally, this works for borrowers who have a low income that is going to increase steadily. The extended plan offers the lowest monthly payments over a longer period, which can easily fit into your budget. However, it equates to higher interest costs. Certainly, choose a different payment plan when refinancing your parent PLUS consolidation loans for repayment.
Reduce Your Monthly Payment
In additional to choosing a new plan, reduce your monthly payment further. Reduce your monthly payment by separately filing your taxes if married. Therefore, only your income is used to calculate the monthly payment allowing for lower charges. Additionally, you can apply for an extended repayment plan. This allows you to pay your loan in smaller payments over a longer period. Furthermore, it is recommended that you apply for an ICR through an income-driven repayment (IDR) program. This is the only plan that is available to parent PLUS borrowers. Of course, there are online resources to calculate how you can lower your monthly student loan payments. Definitely reduce your monthly payment by refinancing your parent PLUS consolidation loans for repayment.
Apply For Loan Forgiveness
Finally, apply for loan forgiveness if eligible. A parent PLUS loan must be included in a federal district consolidation loan to be eligible for an ICR plan. 20% of your discretionary income is taken out monthly to pay the loan. If you have a remaining balance after a 25-repayment term, or 300 payments, your loan is forgiven. Additionally, if the student has passed away, all loans are forgiven. Typically, the IRS treats cancelled debt as taxable income. However, all student loan forgiveness is tax-free through 2025 due to the American Rescue Plan Act of 2021. Certainly, apply for loan forgiveness by refinancing your parent PLUS loan consolidation for repayment.
There are several steps to refinance parent PLUS loan consolidation for repayment. First you can find a lower rate to become debt-free quicker and save money. You can also consider direct government consolidation to receive forgiveness on a balance exceeding 25 years. Additionally, you can choose a different payment plan that can be used to fit your financial situation. Of course, you can compare interest rates to reduce your monthly payments. Finally, apply for loan forgiveness to stop being charged for your loan after 25 years. Certainly, follow these steps to refinance your parent PLUS loan consolidation for repayment.