Summary: Parents have two college loan options when financial aid falls short: Federal Parent PLUS Loans and private loans. Low interest rates, flexible repayment options, monthly payment plans and borrower benefits are available. Learn about each loan program and find the best lender.
Key Takeaways about Parent Student Loans
- Borrowing a Parent PLUS Loans can help finance their dependent undergraduate student's education.
- Parent PLUS Loans are federal loans that parents of dependent students can apply for to help pay for college expenses.
- A parent may borrow up to the full cost of attendance minus any other financial aid received by the student.
- PLUS loans disbursed after July 1, 2024 have an interest rate of 9.08.
- PLUS Loans typically enter repayment once the loan is fully disbursed, however parents can opt to defer their payments based on the student’s enrollment.
- If you’re considering a PLUS Loan, it’s recommended that you compare all your available loan options for parents.
Best Parent Loans for College October 2024
Parent PLUS Loans are typically the best loan program option for parents to help their students pay for college. 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.
Note: A Parent PLUS Loan can also be referred to as a Direct PLUS Loan. When parents of undergraduate students help pay for education expenses not covered by financial aid, the loan is called a Parent PLUS Loan. When a graduate or professional student uses Direct PLUS Loans to help pay for college it's called a Grad PLUS Loan.
Parent PLUS Loan | Private Parent Loans | |
---|---|---|
Current Interest Rate | 9.08% | Starting at 5.09% |
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 | 9.08% (2024 - 2025 academic year) |
Depends on borrower and cosigner credit |
Interest Rate Reduction for Automatic Principal and Interest 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, 2024 - Sept. 30, 2025) |
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 Period | Varies by repayment option plan and loan balance 10 to 25 years |
Varies by lender 5 to 25 years |
Repayment Options | 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. According to the Department of Education, only a biological or adopted parent of a dependent undergraduate student can apply for a Parent PLUS student loan. Unless grandparents or legal guardians have lawfully adopted the student, they do not qualify for Parent PLUS loans.
How Do I Apply for a Parent PLUS Loan?
To apply for a Parent PLUS Loan, the student will need to file the FAFSA (Free Application for Federal Student Aid). When completing the application for the loan, it is then recommended that the parent wait until the school's financial aid office 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 Credit Score do you Need for a Parent PLUS Loan?
As a parent applying for the PLUS Loan, there are no specific credit score requirements to qualify. However, a credit check is necessary to evaluate adverse credit history, such as bankruptcy, repossession, or foreclosures. If the applying parent has an adverse credit history and is unsuccessful in their appeal, a cosigner may be required.
What is a Private Student Loan?
A private student loan can be borrowed by a parent to help cover the cost of attendance. 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 parent 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 9.08% for the 2024 - 2025 award year. The interest rate on a PLUS loan is not subsidized while the student is in school. 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. It is important to remember that with higher interest rates come higher principal and interest payments in the future.
Private Student Loan Rates
Variable rates starting at:
APR
Fixed rates starting at:
APR
Lowest APRs shown for Private Student Loans are available for the most creditworthy applicants for undergraduate loans, and include a 0.25% interest rate reduction while enrolled in automatic payments. Interest rates as of March 4, 2024.
Federal Student Loan Rates
For loans first disbursed July 1, 2024 through June 30, 2025
6.53%
Undergraduate
8.08%
Graduate
9.08%
PLUS Loans
Differences Between Parent PLUS and Private Loan
There are three main differences:
- 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.
- Primary Borrower: The parent is the primary borrower on a Parent PLUS Loan. When applying for the loan as a parent, keep in mind that 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.
- Interest Rate: Parent PLUS Loans have fixed interest rates, currently 9.08% for the 2024 - 2025 academic year. Private student loan interest rates start as low as 5.09% 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 to cover the cost of attendance minus any endowment. Both Parent PLUS and Private Loans are most commonly repaid through monthly payments.
Learn More About Student Loans for College
Best Student Loans for October 2024
Introduction to Parent PLUS Loans
How Does Student Loan Interest Work