I have $120K in parent loans. Can I transfer them to the student?

Q. I now have approximately $120,000 in Parent Plus and student loans. Can responsibility for these loans be legally transferred to the actual student?

— Parent

A. That’s a lot of college debt.

Unfortunately, you can’t transfer a Parent Plus loan to a student.

As the parent borrower, you are legally responsible for repaying the loans, said Jeanne Kane, a certified financial planner with JFL Total Wealth Management in Boonton.

However, she said, you can refinance the Parent Plus loan into a private loan in the student’s name.

But there are a few caveats:

First, Kane said, the student would need to qualify.

“Similar to qualifying for other loans, they would need to have credit history and income to repay the loan,” she said.

Next, you will most likely need to co-sign the loan, which defeats the purpose of you fully transferring the legal responsibility of the loan to the student.

Refinancing the loan means all of the repayment options on Parent Plus loans may not be available to your student with the new loan, so it’s important to keep that in mind, Kane said.

Also, the interest rate may be higher or lower with a private loan than it is on the Parent Plus loan, she said.

“Parent Plus loan rates for loans first disbursed on or after July 1, 2021 and before July 1, 2022 have a fixed rate for the life of the loan of 6.28%,” she said. “The rates on a new loan will be based on the student’s credit score or yours as the co-signer.”

Private loan interest rates will vary so you will want to help your student shop around for the best rates and terms, she said.

“We recommend that parents start talking with their children early, long before they apply to college, about how much they’re willing to contribute or take on as debt,” she said. “This discussion also sets expectations for the student so he/she knows how much they will be responsible for.”

For example, a student pursuing a rewarding but not high-paying career in social work may make a different choice about where they attend college if they know how much they personally will have to pay in loans when they graduate, Kane said.

Email your questions to Ask@NJMoneyHelp.com.

Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.