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My dad took out a loan for me to go to school that currently has a principal of $58,000. Its interest rate is 7.5%. Even though it's not technically my loan, I'm paying all of it by the agreement my dad and I had before I went off to school.

If I refinanced it with a private lender (I know I'd lose some benefits, don't worry about that), I could lower the interest rate to less than 4%. However, my dad's income is not nearly high enough to be approved by the new lender, but mine is.

So, not expecting my dad to kick the bucket within the next 5 years (by then I would have already paid off the loan at the current rate), should I, and can I put the loan under my name in favor of the better interest rate?

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  • The private loan to pay off the PLUS is intriguing. However, would that $58k used to pay off the loan be treated as income by the IRS as far as your dad is concerned? I'm not sure how the IVR treats loan payoffs by some other party.
    – zanussi
    Commented Apr 15, 2015 at 20:29
  • @mikkel It would be a gift, which isn't income per se but if it's over the personal annual exemption ($16k or so, varies by year) would have to come out of your personal lifetime total, and be reportable I'd think on your side (though not taxable, unless you're already over the limit, which seems unlikely). (And of course, most of the people in this situation aren't likely to ever hit the personal lifetime total, but that doesn't mean you don't have to file paperwork...)
    – Joe
    Commented Dec 9, 2015 at 21:34

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Unfortunately, Parent PLUS loans can't be transferred from parent to child. It's his loan, and he's ultimately responsible for repayment per the government.

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  • Link is broken.
    – Chris Cirefice
    Commented Aug 18, 2016 at 17:16
  • Scratch that, the whole website is broken. It always redirects to login now. Hope they fix that soon!
    – Chris Cirefice
    Commented Aug 18, 2016 at 17:24
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Yes, you can transfer your father's Parent PLUS loan into your name by refinancing with a private lender. Keep in mind, not all private lenders currently offer this feature, and also private student loans don't offer as many repayment benefits as federal student loans. Repayment benefits typically not included: Income Driven Repayment plans, Public Service Loan Forgiveness. See my blog post about this and other options for dealing with parental student loan debt.

*Note: Student Loan Hero does contain advertising and affiliate links to 3rd parties. Also, I am the CEO of Student Loan Hero.

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  • I've made some substantial edits; your first link was entirely irrelevant, and your second really deserved a better explanation I think of what it added to the subject. I also would say that I disagree with the general content of your post: I don't think "refinancing" is a legitimate word to use here. Technically this would be taking out a new loan to pay back an old one - as the .gov link from the other question says, this is not transferable. It would be technically a gift from you to your parents of the money to pay it back, which could have tax implications.
    – Joe
    Commented Dec 9, 2015 at 21:32
  • @Joe - Thanks for the edits. FYI - There are no tax implications by transferring the student loan from a parent to the child. The only tax deduction that is relevant would be the "Student Loan Interest Tax Deduction" will allows you to deduct up to $2,500 of student loan interest paid.. with obviously some income stipulations. see more here: link
    – Andrew Josuweit
    Commented Dec 10, 2015 at 22:48

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