Paying for your child’s college education can get expensive, especially as tuition costs continue to climb. Many parents find themselves wondering, “How can we make this work?” For families who need extra financial support, parent student loans might be the option you need. Supporting your child’s educational dreams is a meaningful goal, and finding the right financial path is important for achieving it.
Parent student loans come in several types, each with unique features and benefits. Understanding your options is the first and most important step in finding the loan that best suits your family’s financial needs. Fortunately, there are plenty of resources available to help simplify the process.
When researching loans, pay attention to important details like interest rates, which influence the total cost of borrowing, and repayment terms, which outline when and how payments must be made. Some loans also offer added benefits, like forgiveness programs or flexible payment options, which can help make managing payments easier over time.
By gathering the right information and tools, you can approach this decision with confidence. Careful planning and thoughtful choices will help you find a loan that balances affordability with your family’s goals. With the right approach, you can make your child’s college education possible without taking on unnecessary financial stress.
Best Private Parent Loans for College
- Check your eligibility in just 2 minutes
- Flexible repayment options you can choose from
- No fees for origination, disbursement, prepayment, or late payment3
- Skip a payment once per year (once repayment period restarted)4
- Will cover up to 100% of the school's certified cost of attendance
- 9-month grace period (3 months more than most lenders)2
- Apply over the phone with the Client Happiness Team
- Call 866-492-1222, Monday through Friday, 5 A.M. - 5 P.M. PST
- Mention us when you call in to start your application
This information is for graduate and undergraduate students attending participating degree-granting schools. Borrowers must be U.S. citizens or U.S. permanent residents if the school is located outside of the United States. Non-U.S. citizen borrowers who reside in the U.S. are eligible with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident) and are required to provide an unexpired government-issued photo ID to verify identity. Applications are subject to a requested minimum loan amount of $1,000. Current credit and other eligibility criteria apply.
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.72% APR to 16.74% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.24% APR to 17.10% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
1You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
2Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.
3Earnest does not charge fees for origination, late payments, or prepayments. Florida Stamp Tax: For Florida
residents, Florida documentary stamp tax is required by law, calculated as $0.35 for each $100 (or portion thereof) of the principal loan amount, the amount of which is provided in the Final Disclosure. Lender will add the stamp tax to the principal loan amount. The full amount will be paid directly to the Florida Department of Revenue. Certificate of Registration No. 78-8016373916-1.
4Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.
The information provided on this page is updated as of 12/11/2024. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest Private Student Loans are made by One American Bank, Member FDIC, or FinWise Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Finwise Bank, 756 East Winchester, Suite 100, Murray, UT 84107
Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support from Higher Education Loan Authority of the State of Missouri (MOHELA) (NMLS# 1442770). One American Bank, FinWise Bank, and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.
© 2024 Earnest LLC. All rights reserved.
THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.
- Competitive APRs starting at 3.47%1
- Coverage up to 100% of your school-certified cost of attendance ($1,000 minimum) 2
- Multiple repayment options including: full principal and interest, interest-only, deferred, and flat payment
- Flexible payment terms ranging from 5, 8, 10, and 15 years3
- No origination, application and processing fees, no fees for early repayment
- Apply online in 3 minutes and get an instant credit decision
- Applying with a cosigner can increase your chances of getting approved and could result in a lower interest rate
College Ave's student loan products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
2As certified by your school and less any other financial aid you might receive. Minimum $1,000.
3This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 02/03/2025. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
- Choose the #1 Private Student Loan Lender in the Nation. Sallie Mae is trusted by more families than any other private student loan lender.
- Variable Rates: 4.54% APR - 14.71% APR. Fixed Rates: 3.49% APR - 15.49% APR. Lowest rates shown include 0.25 percentage point interest rate discount with auto debit payments.1
- Applying online is easy - you could receive a credit result in about 10 minutes.2
- Multiple repayment options from in-school payments to deferred.1 No origination fee or prepayment penalty2
- Last year, students were 4x more likely to be approved with a cosigner3 and it may help you get a better rate.
- Borrow up to 100% of school-certified expenses, whether you're online or on campus4
Borrow Responsibly
We encourage students and families to start with savings, grants, scholarships, and federal student loans to pay for college. Evaluate all anticipated monthly loan payments, and how much the student expects to earn in the future, before considering a private student loan.
Loans for Undergraduate & Career Training Students are not intended for graduate students and are subject to credit approval, identity verification, signed loan documents, and school certification. Student must attend a participating school. Student or cosigner must meet the age of majority in their state of residence. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident), and provide an unexpired government-issued photo ID. Requested loan amount must be at least $1,000.
1Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment.
2Although we do not charge a penalty or fee if you prepay your loan, any prepayment will be applied as outlined in your promissory note-first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.
3Based on a comparison of the percentage of students who were approved with a cosigner to the percentage of students who were approved without a cosigner from October 1, 2022 to September 30, 2023.
4For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time.
Information advertised valid as of 01/27/2025.
SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.
Sallie Mae Loans are made by Sallie Mae Bank. Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their respective owners.
Edvisors is not the creditor for these loans and is compensated by Sallie Mae for the referral of Sallie Mae loan customers.
© 2025 Sallie Mae Bank. All rights reserved. SLM Corporation and its subsidiaries, including Sallie Mae Bank are not sponsored by or agencies of the United States of America.
- AFFORDABLE fixed rates starting at 3.39% APR with Automatic Debit Discount*
- 1% CASH BACK Graduation Reward*
- NON-COSIGNED option may be available for eligible undergraduate juniors and seniors.
- PAY AFTER LEAVING SCHOOL – Customize your loan with flexible repayment options – start payments after graduation.
- FORGET FEES – No application, origination or disbursement fees. No late fees and no prepayment penalty if you choose to pay your loan off early.
- COVER UP TO 100% of your tuition and eligible living expenses.
* Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations, terms and conditions may apply for Ascent's Terms and Conditions please visit: AscentFunding.com/Ts&Cs. Annual Percentage Rates (APRs) displayed above are effective as of 2/1/2025 and reflect an Automatic Payment Discount of 0.25% for credit-based college student loans and 1.00% discount on outcomes-based loans when you enroll in automatic payments. The Full P&I (Immediate) Repayment option is only available for college loans (except for outcomes-based loans) originated on or after June 3, 2024. For more information, see repayment examples or review the Ascent Student Loans Terms and Conditions. The final amount approved depends on the borrower’s credit history, verifiable cost of attendance as certified by an eligible school, and is subject to credit approval and verification of application information. Lowest interest rates require full principal and interest (Immediate) payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the examples above, based on the amount of time you spend in school and any grace period you have before repayment begins. 1% Cash Back Graduation Reward subject to terms and conditions. For details on Ascent borrower benefits, visit AscentFunding.com/BorrowerBenefits. The AscentUP platform is only available to eligible Ascent borrowers and subject to terms and conditions.
The minimum amount is $2,001 except for the state of Massachusetts. Minimum loan amount for borrowers with a Massachusetts permanent address is $6,001.
- All online, all easy.
- SoFi covers 100% of school-certified costs.
- No fees. Period.
- Repay your way with flexible repayment options (find the monthly student loan payment and rate that fits your budget).
- Applying with a cosigner may increase your chances of approval and getting a better rate.
- Over 1 million students have chosen SoFi.
SoFi Private Student Loan
Undergraduate, Graduate, MBA, Law, Health Interest Rates: Eligibility and Important Details. Fixed rates range from 3.54% APR to 15.99% APR with 0.25% autopay discount. Variable rates range from 4.64% APR to 15.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates are capped at 17.95%. SoFi rate ranges are current as of 1/7/25 and are subject to change at any time. Your actual rate will be within the range of rates listed above and will depend on the term and type of repayment option you select, evaluation of your creditworthiness, income, presence of a co-signer (if applicable) and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. Check out our eligibility criteria at https://www.sofi.com/eligibility-criteria/. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).
Parent
Interest Rates: Eligibility and Important Details. Fixed rates range from 5.74% APR to 16.85% APR with a 0.25% autopay discount. Variable rates range from 6.07% APR – 16.85% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates are capped at 17.95%. SoFi rate ranges are current as of 1/7/25 and are subject to change at any time. Your actual rate will be within the range of rates listed above and will depend on the term and type of repayment option you select, evaluation of your creditworthiness, income, presence of a co-signer (if applicable) and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. Check out our eligibility criteria at https://www.sofi.com/eligibility-criteria/. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 8/5/24 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org)
- Get a rate quote in about 2 minutes with no impact to your credit score.2
- Applying with a qualified cosigner could improve your chances of approval and could even get you a lower rate.3
- After applying, you may qualify for Multi-Year Approval.4 This means you wouldn’t have to reapply next year. If eligible, prior to each academic year, simply log in to your account and request funds with no application and no hit to your credit score!
- Choose from flexible repayment options that best fit your current situation.
- No origination, application, or disbursement fees.
- No penalty for paying more than the minimum payment or paying your loan off early.
- A Citizens Student Loan™ could cover 100% school-certified costs.
1 RATE DISCLOSURES
Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of Dec 01, 2024, the 30-day average SOFR index is 4.7%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, interest-only repayment, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DC, DE, FL, MA, MD, MI, NH, NJ, NY, OH, PA, RI, VA, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
2Get My Rate: Selecting “Get My Rate” only requires a "soft credit pull" which does not affect your credit score. Submitting a full application will result in an inquiry on your credit report.
3Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply. Borrowers whose loans were funded prior to reaching the age of majority may not be eligible for co-signer release. Note: co-signer release is not available on the Student Loan for Parents or Education Refinance Loan for Parents.
4Multi-Year Approval: Funds available for future use are subject to a soft credit inquiry at time of your next request to verify continued eligibility. After we make the initial Loan to you, you must continue to meet eligibility criteria to obtain additional funds under the Multi-Year Approval feature. Terms and conditions are outlined in the promissory note. Multi-Year Approval borrowers have a 99% approval rate on future requests for additional funds. The additional funds approval rate is based on the percentage of approved Multi-Year borrowers from Citizens between October 1, 2022 and October 1, 2023. The approval rate represents only borrowers who had previously accepted the Multi-Year Approval offer.
Please Note: International students are not eligible for Multi-Year Approval.
Information advertised valid as of 12/19/24. Rates and offer subject to change. All accounts, loans and services subject to individual approval.
© 2024 Citizens Financial Group, Inc. All rights reserved. Citizens is a brand name of Citizens Bank, N.A. Member FDIC
- Prequalification: Prequalify to estimate your rate without affecting your credit score
- Online Application Process: Submit online application in minutes
- Flexible Repayment Options: ELFI offers immediate, interest only, partial payment, and fully deferred repayment options
- No Fees: No application fees, origination fees, or prepayment penalties
- Low Rates: Fixed rates from 3.69% to 14.22% and variable rates from 5.00% - 13.97%*
- Award winning Customer Service: Individually paired Student Loan Advisor to guide you through the application process
*ELFI is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 01-01-2025. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.
Types of Parent Student Loans
Parent student loans are a type of loan that parents can take out to help pay for their child’s education. If you want to borrow a federal parent student loan, like a Direct PLUS Loan, you can only borrow a loan for your dependent undergraduate student's school expenses. Some private student loan lenders may allow parents to borrow or cosign for their child’s undergraduate and graduate college expenses. When trying to figure out how to pay for college, these loans can be an invaluable resource for families who need extra financial assistance.
There are several types of parent student loans available. The most popular options include Direct Parent PLUS Loans, private student loans from banks or other lenders like College Ave or SoFi, and state-sponsored programs like Rhode Island Student Loan Authority (RISLA).
Federal Direct PLUS Loans (for Parents)
Federal Parent PLUS Loans are offered by the U.S. Department of Education through the William D. Ford Federal Direct Loan Program (FDLP) to parents borrowing on behalf of their children. Parents can borrow up to the full cost of attendance, minus any other financial aid received.
These loans have interest rates that are set each year by federal law and are fixed, meaning they remain the same throughout the life of the loan. PLUS loans come with certain federal benefits such as a wider selection of repayment plans and forbearance and deferment options that may not be available with private parent loans.
In addition to other meeting the general financial aid eligibility requirements, eligibility requirements include having no adverse credit history (a record of poor repayment history on one or more loans or credit cards) and being a U.S. citizen or eligible non-citizen with a valid Social Security number. The application process involves having the student submit a FAFSA® (Free Application for Federal Student Aid) and completing a Direct PLUS Loan Application.
Private Parent Student Loans
Private student loans from banks or lenders like College Ave or SoFi offer competitive interest rates but may require a cosigner if your credit score isn’t high enough. These loans do not qualify for federal benefits such as income-driven repayment plans or loan forgiveness programs.
Private parent loans are offered by private lenders such as banks, online lenders and credit unions, rather than the federal government. They have competitive interest rates for those with good to excellent credit, repayment terms that vary from 5 years up to 15 or possibly more, making them attractive to many borrowers. However, they typically require a borrower or co-signer with good credit in order to qualify for the best rates and terms available.
Parent PLUS vs Private Parent Loans
Parent PLUS loans and private parent student loans are two of the most commonly used types of loans to finance a college education. Both loan types can be used to cover tuition, fees, room and board, books and supplies, transportation, and other educational expenses.
When comparing parent PLUS loans vs private parent loans, there are several key differences to consider:
Amount: With parent PLUS loans, parents can borrow up to the full cost of attendance minus other financial aid received; while private parent loans will allow you borrow up to the student’s cost of attendance minus other financial aid received, a borrower may be approved for a lesser limit based on the lender's policies and the borrower's creditworthiness.
Interest Rates: Federal parent PLUS loans have fixed interest rates for award year 2024 - 2025 will be 9.08%, while private parent loan rates may be variable or fixed depending on the lender's current rates and the borrower's creditworthiness.
Repayment Options: Federal parent PLUS loans offer several repayment options including deferment or forbearance if needed; while private lenders may have options for deferment, they are for more limited and stringent requirements for qualifying for them.
Co-Signer Requirements: Private lenders typically require a co-signer with good credit in order to qualify for their best rates and terms; while most borrowers will not be required to obtain a cosigner for a federal Direct PLUS Loan, if a borrower has adverse credit they have the option to reapply with a creditworthy cosigner.
State-sponsored programs can be an option but are generally offered by local banks or credit union. For example, RISLA offer low-interest rate loans with generous repayment terms but may only be available to residents of certain states or universities within those states.
Interest Rates
The interest rates on parent student loans vary depending on the type of loan you choose and your creditworthiness (if applicable). Federal parent Direct PLUS Loans have fixed interest rates that are set each year by the federal law and for loans first disbursed on or after July 1, 2024, and before July 1, 2025, the interest rate is currently 9.08%.
Private student loans from banks or other lenders typically offer a variable or fixed interest rates that currently range from 7% to 13%. State-sponsored programs usually offer lower interest rates than private lenders but may only be available to residents of certain states or universities within those states.
Repayment Terms
Repayment terms also vary depending on the type of loan you choose but generally range from 10 years up to 25 years for federal Parent PLUS Loans and up to 15 years or more for private student loans from banks or lenders. State-sponsored programs may offer generous repayment terms than private lenders but again may have strict qualifications (such as state of residence) as to who can access these loans.
Repaying a Parent PLUS Loan
When it comes to repayment options for Parent PLUS loans, borrowers have several choices available to them. The Standard Repayment Plan is the most common option for these loans and requires borrowers to make fixed monthly payments over a period of 10 years.
The Graduated Repayment Plan allows borrowers to make lower payments at first which gradually increase over time. The repayment term will still be 10 years, but this repayment option will have a higher total cost compared to the Standard Repayment plan due to the smaller payments at the start of repayment.
The Extended Repayment Plan offers lower monthly payments spread out over 25 years but also results in higher total interest costs compared with other plans. To qualify you will need to have at least $30,000 in a specific student loan program, like Direct Loans.
The Income-Contingent Repayment (ICR) Plan is an income-driven plan that bases monthly payments on a borrower’s income level and family size; however, this plan may not be available for all borrowers depending on their individual circumstances. To repay a Direct PLUS Loan for a parent borrower, the borrower would need to consolidate their loan into a Direct Consolidation loan to be eligible to repay the debt under an ICR plan.
Repaying Private Parent Student Loans
For private parent student loan borrowers, there are several different repayment options available as well. Borrowers can choose from either fixed or variable rate plans depending on their individual needs and preferences.
Borrowers can also opt for shorter repayment terms if they want to pay off their debt faster; however, this will likely result in higher monthly payments due to the shorter timeframe for repayment. Some lenders may offer special features such as grace periods or deferment options that allow borrowers more flexibility when it comes to making payments on their loan balances. Unlike a federal student loan, a private student loan borrower will choose their repayment option at the time they apply for the loan.
No matter which type of loan you choose—Parent PLUS or private parent student—it’s important to understand all of your available repayment options before making any decisions about how you’ll repay your debt. Be sure to compare all your options carefully so you can make an informed decision about which one is best for you based on your individual financial situation and goals for repaying your debt quickly and efficiently.
Another option for private student loan borrowers if you want to change your repayment terms would be to refinance your loan(s). You would need to find a private student loan refinance lender, apply, and choose a repayment option for your new loan. Many private student loan borrowers will research their refinance options to see if they would be eligible for a lower interest rate or more efficient repayment terms.
Potential Risks & Challenges
When it comes to financing higher education, parent student loans are often seen as a viable option. However, taking out a loan is not without its risks and potential drawbacks. While parent student loans can help cover college expenses, there are some potential risks and challenges associated with them that parents should be aware of before applying for a loan.
One risk is taking out too much money which could lead to difficulty making payments after graduation due to high monthly payments relative to your income level at that time.
Another risk is taking out a loan with an adjustable rate which could result in higher payments if market conditions cause interest rates to rise over time.
Then, there is always the risk that you won’t be able to make your payments due to unforeseen circumstances such as job loss or illness which could lead to defaulting on your loan resulting in negative consequences such as wage garnishment or damage to your credit score.
The most obvious risk associated with parent student loans is the amount of debt that can accumulate over time. According to the College Board, the average cost of tuition at a public four-year college was $10,440 in 2019-2020.
With room and board included, this number jumps up to $21,950 per year. For private colleges, tuition alone can range from $36,880 to $48,510 per year depending on the institution. Taking out a loan for these costs can add up quickly and become difficult to manage if not done responsibly.
Along with accumulating debt, there are other consequences that come with taking out parent student loans. These include credit score damage due to missed payments or defaulting on the loan; difficulty obtaining other types of credit; and increased stress levels due to financial strain.
Tips For Making the Best Choice
When choosing a parent student loan in February 2025 there are several factors that parents should consider before making their decision including: interest rate; repayment term; eligibility requirements; fees; potential risks; and any special offers such as discounts for autopay enrollment or loyalty rewards points programs offered by some lenders.
We can’t stress it enough, it’s important for parents not take out more money than they need so they don’t end up struggling with large monthly payments after graduation.
Fortunately, there are alternatives available for families looking for ways to finance higher education without taking on too much debt. Scholarships and grants are two great options that don’t require repayment after graduation.
Also consider, work-study programs which provide students with an opportunity to earn money while attending school which can help offset some of the costs associated with higher education expenses. Lastly, 529 plans allow families to save money tax-free for educational expenses in the future while also providing certain tax advantages when used appropriately.
When considering parent student loans as an option for financing higher education expenses it’s important to make informed decisions. Here are some practical tips that can help:
• Research different lenders and compare interest rates before signing any paperwork
• Consider alternative options such as scholarships or grants before taking out a loan
• Make sure you understand all terms associated with the loan including repayment schedules
• Don’t take out more than you need – only borrow what is necessary
• Create a budget plan that includes how much you need each month for loan payments
• Keep track of your credit score regularly so you know where you stand financially
• Make sure your child understands their responsibility in repaying any loans taken out in their name
• If possible, make extra payments whenever possible so you can pay off your debt faster
• Seek professional advice if needed – there are many resources available online or through your local bank or credit union