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Home Student Loans Credit Unions Parent PLUS Loans vs Private Student Loans

Parent PLUS Loans vs. Private Student Loans

Summary: Parents have two college loan options when financial aid falls short: Federal Parent PLUS Loans and private loans. Low interest rates, flexible repayment plans and borrower benefits are available. Learn about each program and find the best lender.

Best Parent Loans for College July 2022

Parent PLUS Loans are typically the best option for parents. However, private parent loans often offer more competitive interest rates and no origination fees. If you have excellent credit, or a creditworthy cosigner, a private parent loan may be the right choice for you for long-term savings.

   Parent PLUS Loan Private Parent Loans
Current Interest Rate   7.54% Starting at 0.99%

Best Private Parent Loans for College

Cosigner Recommended
Sallie Mae Private Student Loans
Best for Private Loans
Interest Rates

Variable Rates: 2.00% APR - 12.35% APR1

Fixed Rates: 3.75% APR - 13.72% APR1

Repayment Terms


Cosigner Recommended
Nelnet Student Loans
Best for Private Loans
Interest Rates

Variable: 1.57% APR (with auto debit discount) to 11.25% APR (without auto debit discount)1


Fixed: 3.34% APR (with auto debit discount) to 11.68% APR (without auto debit discount)1


Lowest rates listed above include an interest rate reduction for eligible applications, enrollment in auto debit, and are available only to the most creditworthy applicants. Advertised variable rates reflect the starting range of rates and may increase over the life of the loan. [See Disclaimer]

Repayment Terms

Multiple Term Options Available

Sallie Mae Private Student Loans
Best for Private Loans
Interest Rates

Variable: 1.86% APR – 11.52% APR1

Fixed: 3.20% APR – 11.99% APR1

Repayment Terms

5 , 7 , 10 and 15 years

Cosigner Recommended
Ascent offers loans that power bright futures
Best for Private Loans
Interest Rates

Variable rates as low as: 0.98% APR1

Fixed rates as low as: 3.22% APR1

Repayment Terms

5, 7, 10, 12 and 15 years

Sallie Mae Private Student Loans
Best for Private Loans
Interest Rates

Variable rates as low as: 1.69% APR (with autopay)*

Fixed rates as low as: 3.75% APR (with autopay)*

Repayment Terms

Up to four repayment types (including no payments while in school) and multiple repayment terms help you find the loan that fits your budget

Cosigner Recommended
Earnest Private Student Loan
Best for Private Loans
Interest Rates

Graduate Rates

Fixed:3.24%-10.99% APR1


Undergraduate Rates



Repayment Terms

5, 7, 10,15 or 20 years

Both Parent PLUS Loans and private student loans can help cover the difference between the total cost of attendance (COA) of your school and the financial aid you receive. Both types of loans can be used to pay for educational expenses such as:

  • Tuition and fees
  • Room and board
  • Books
  • Supplies
  • Equipment
  • Transportation
  • Miscellaneous/personal expenses

Parent PLUS Loan vs. Private Loan

Parent PLUS Loan Private Student Loan
Primary Borrower Parent of a dependent undergraduate student Parent or Student
Cosigner Required Only if parent has an adverse credit history Cosigner may be required
FAFSA Required Yes No
Lender Federal government Private lenders and financial institutions
Interest Rate Type Fixed Fixed and variable options
Interest Rate 7.54%
(2022-2023 academic year)
Depends on borrower and cosigner credit
Interest Rate Reduction for Automatic Payments 0.25% Varies by lender
Tax Deductible Interest Yes Yes
Subsidized Interest N/A N/A
Loan Fees 4.228%
(Loans disbursed Oct. 1, 2021 - Sept. 30, 2022)
Varies by lender
Typically 0% to 5%
Depending on credit
Annual Loan Limits Cost of Attendance (COA) minus other student aid Cost of Attendance (COA) minus other student aid
Cumulative Loan Limits No Varies by lender
May vary by degree/major & credit
Repayment Term Varies by repayment plan and loan balance
10 to 25 years
Varies by lender
5 to 25 years
Repayment Plans Standard, Extended, Graduated Varies by lender
Death Discharge Student or Parent Varies by lender
Disability Discharge Parent only Varies by lender

What is a Federal Parent PLUS Loan?

A federal Parent PLUS loan is offered under the federal student loan program. The loan is only an option for parents of dependent undergraduate students.

How Do I Apply for a Parent PLUS Loan?

To apply for a Parent PLUS Loan, the student will need to file the FAFSA. It is then recommended that the parent wait until the school provides the student with a financial aid offer first. You can find all the details in our companion article about Federal Parent PLUS Loans.

What is a Private Student Loan?

A private student loan can be borrowed by a parent to help cover a child’s college costs. Private student loans are offered by many private student loan lenders. In addition, a parent may cosign a student loan for their child. Parents who cosign for their child may not be the borrower, but are considered equally responsible to repay the loan as a cosigner.

Private Parent Student Loan

When it comes to finding a private student student loan, you may want to get an idea of some lenders that work with your child's school. We can help with that. Insert your child's school below to see lenders we work with that offer competitive loan products.

College Loan Rates for Parents

A parent PLUS loan will have an interest rate set by congress each year. The current rate is 7.54% for the 2022-2023 award year. A private student loan will have interest rates based on current market trends and the strength of the borrower’s (and if applicable, cosigner) credit.

student loan interest rates for 2020 

Differences Between Parent PLUS and Private Loan

There are three main differences:

  1. Lender: Parent PLUS Loans are federal student loans. The federal government is the lender. Private student loans are offered by private financial institutions, such as banks and credit unions, states, as well as colleges and universities.
  2. Primary Borrower: The parent is the primary borrower on a Parent PLUS Loan. The primary borrower of a private student loan can be the parent or the student. The parent may be a cosigner on the student’s private student loan.
  3. Interest Rate: Parent PLUS Loans have fixed interest rates, currently 7.54% for the 2022-2023 academic year. Private student loan interest rates start as low as 0.99% and are based on borrower credit and come in fixed and variable interest rate options, depending on the lender.

Families should always consider scholarships, grants, and federal student loans, like Direct Subsidized and Unsubsidized Loans, before applying for private student loans.

Learn More About Student Loans for College

Best Student Loans for July 2022

Introduction to Parent PLUS Loans

Private Parent Student Loans

How Does Student Loan Interest Work

Tuition Payment Plans

Student Loan APR


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