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Home Student Loans Parent Student Loans 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 options, monthly payment plans and borrower benefits are available. Learn about each loan program and find the best lender.

Best Parent Loans for College June 2022

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   7.54% Starting at 0.99%

Best Private Parent Loans for College

Sallie Mae Private Student Loans
Best for Private Loans
Interest Rates

Variable: 1.30% 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: 1.78% APR1

Fixed rates as low as: 5.17% APR1

Repayment Terms

5, 7, 10, 12 and 15 years

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 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, 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 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?

When applying for the PLUS Loan as a parent, there are not specific credit score requirements to qualify for the loan. However, a credit check is required to look for signs of adverse credit history such as bankruptcy, repossession or foreclosures.  A cosigner may be required only if the parent applying for the PLUS loan has an adverse credit history and they are unable to win an appeal.

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 7.54% for the 2022-2023 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.  

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. 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.
  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 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 June 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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