How This Parent Refinanced $150,000 in Student Loans — Without a Degree

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This post was originally published on Dec. 27, 2017.

If you borrowed for college but did not graduate , trying to refinance student loans without a degree can be a challenge. That goes for students and, in the case of Tina MacDonald, parents too.

Having never finished college themselves, MacDonald and her husband prioritized their son’s education: They borrowed federal Parent PLUS Loans to pay for a private education. However, doing so caused them to rack up six figures of debt and endangered their retirement.

In her search for possible solutions, MacDonald heard about student loan refinancing and thought it sounded like a good strategy to pay off the debt. Unfortunately, her lack of a diploma was a sticking point initially.

To refinance student loans without a degree is possible, however. Let’s see how MacDonald accomplished it (and how you can too) by looking at the following topics:

Borrowing money to pay for her child’s education Looking into student loan refinancing for Parent PLUS Loans Finding a lender to refinance student loans without a degree Refinancing student loans without a degree Borrowing money to pay for her child’s education

MacDonald’s son chose a prestigious but expensive private school for college. He took out his own loans but needed help to cover the rest, so MacDonald and her husband offered to take out loans to pay for the remaining balance.

To cover tuition and other fees, MacDonald took out a total of about $140,000 in Parent PLUS Loans. Unfortunately, they came with a high interest rate of 7.90%.

“After five years, (the loan balance) grew to over $150,000,” MacDonald said.

The monthly payments on the loans were huge, so MacDonald opted for a graduated repayment plan — where payments start small and increase every two years — to reduce the monthly payment.

At first, the payments were manageable, but they increasingly became difficult. By the time she started researching other options to manage her debt, her monthly payments were $1,835.

“At the time (I considered refinancing), we had been through two increases already,” she said. “In a few years, (the payments) would have been insane.”

Looking into student loan refinancing for Parent PLUS Loans

With such a large payment, MacDonald worried about saving enough for retirement and her other children’s education. She began researching options online.

“I’ve always been kind of interested in finance, and I’ve always handled the mortgages and the insurance,” MacDonald said. “Over the past couple of years, I had been thinking about (refinancing).”

During her research, she came across Student Loan Hero and signed up for the weekly newsletter. She learned about how refinancing Parent PLUS Loans and how it could potentially help her.

“It was a big decision, and I was afraid,” MacDonald said. “That interest was crazy. But I kept thinking about that pending increase (with the graduated repayment plan). My payments would have been over $3,600 a month.”

Despite the benefits of refinancing, MacDonald was nervous about giving up the perks that come with federal loans.

“The only thing that frightened me is that when my husband was laid off a few years ago, we were able to put our payments on hold,” she said. “It was a big deal to give that option up.”

However, MacDonald decided to pursue refinancing despite the possible drawbacks of refinancing federal student loans.

Finding a lender to refinance student loans without a degree

MacDonald looked at our list of recommended student loan refinancing lenders and ended up applying to four of them. Initially, she worried that the loans were too big to refinance all at once, so she applied to have just half of the loans refinanced.

MacDonald and her husband are in their late 50s and make over $300,000 per year. Although that would make them sound like ideal applicants on paper, two lenders denied them.

Turned out, trying to refinance student loans without a degree — even as parents — was easier said than done.

“Even though we’ve never been late on a payment, we were denied because we never finished college,” she said. “They wouldn’t consider us because we didn’t have a degree.”

Thankfully, she did find a lender willing to refinance student loans without a degree: SoFi. After completing the application online, she received an approval notification just a few hours later.

Even better, MacDonald’s new loan included unemployment protection and would have a fixed interest rate of just 5.50%. With the new rate and loan term, she no longer had to worry about the payment growing.

“My payments are just under $1,800, but they’ll never change,” she said.

With more wiggle room in her budget, MacDonald said she feels more secure.

“A lot of people are afraid of financial things and don’t take action,” she said. “But you can save so much money by doing it.”

You can refinance student loans without a degree, too

By refinancing her loans, MacDonald was able to lock in a monthly payment she could afford, freeing up money to put toward her other goals. That extra cash flow will go a long way in helping her other, younger children pay for school and for her own retirement.

Student loan repayment without a diploma on the wall can be a serious burden. The outstanding loans can affect your monthly budget, your ability to get a mortgage and even how much you can save for retirement.

Fortunately, there are reputable lenders that refinance student loans without a degree.

SoFi was the solution for MacDonald, but another lender could be up your alley.

If you’re looking to refinance student loans without a degree, check out other banks, credit unions and national companies with this option:

Andrew Pentis contributed to this report.

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