Can You Transfer Student Loans to Another Person?

Student loans are legally binding financial agreements established directly between a borrower and a lender. These are personal contracts, meaning the original loan obligation cannot be directly transferred from one individual to another, similar to a property deed. The initial borrower remains legally accountable for the debt.

Understanding Student Loan Obligations

Student loans represent a personal financial commitment tied to an individual’s credit history, income, and legal identity. When a loan is originated, the borrower signs a promissory note. This legally enforceable document outlines the terms of repayment, including interest rates, fees, and the payment schedule. The promissory note establishes the borrower’s responsibility for the loan.

Lenders assess a borrower’s financial standing and risk profile during the underwriting process before approving a loan. This evaluation includes reviewing credit scores, income stability, and debt-to-income ratios. The legal responsibility for repayment rests with the individual who signed the original promissory note. This obligation persists unless the loan is fully satisfied or discharged through specific legal processes such as bankruptcy, death, or total and permanent disability.

Refinancing as a Path to New Ownership

The financial burden of student loans can be shifted through a process called refinancing. This involves obtaining a new private loan in the name of a different individual. The proceeds from this new loan are then used to pay off the original student loan entirely.

The new borrower must apply for this loan, undergoing a comprehensive credit assessment. This application typically requires a strong credit history, often a credit score of 650 or higher, stable income, and a manageable debt-to-income (DTI) ratio, generally below 50%. Lenders evaluate the applicant’s financial health, including employment status, savings, and other existing debts. Once approved and disbursed, the original student loan is paid off, releasing the initial borrower from their obligation.

Refinancing federal student loans into a new private loan results in the forfeiture of all federal loan benefits and protections. These include access to income-driven repayment plans, deferment and forbearance options, and eligibility for federal loan forgiveness programs such as Public Service Loan Forgiveness. Borrowers should carefully weigh these lost benefits against potential savings from a lower interest rate offered by private refinancing.

Shifting Responsibility in Specific Loan Scenarios

Refinancing is often utilized in situations where individuals aim to shift student loan responsibility. For instance, parents who took out Parent PLUS loans on behalf of their children often seek to transfer this debt to the student. The student must apply for a new private student loan in their own name, meeting the private lender’s eligibility requirements.

If the student qualifies, the new loan pays off the Parent PLUS loan, and the parent is released from the original debt. Similarly, a parent or another financially capable individual might refinance a student’s loan into their own name. This can occur if the student is facing financial hardship or if the parent wishes to assume the debt as a gift or for family financial planning.

The parent or new individual must meet the private lender’s underwriting criteria, including strong credit and stable income. The new loan then replaces the student’s original obligation.