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Parent student loans can help cover college costs if you hit your student loan limits on federal student loans. Although the best parent student loans for your situation will depend on the rates, terms, and protections you’re offered, there are two types of parent loans: Parent PLUS Loans and private parent loans.
Whether you decide on a federal or private parent student loan, both parent and child should agree on a repayment plan. Although children might be willing to make payments on parent loans, legally it’s the parent’s responsibility to pay it back.
The private student loan companies in this article are all Credible’s partner lenders. We have not included other lenders.
What you should know about parent student loans:
- Private parent student loans
- Federal Parent PLUS Loans
- Federal PLUS Loans vs. private parent student loans
- Parent loans FAQ
Private parent student loans
Interest rates on private parent student loans can be competitive with federal Parent PLUS Loans. But the interest rate you’re offered will depend on your credit history and the amount you can borrow will depend on how much of your monthly income is already committed to repaying other debt.
Many banks, direct lenders, and state student loan authorities compete to offer private loans to students. But a smaller set of lenders offer private parent student loans. Since there are fewer opportunities to shop around, it’s even more important to get rates from multiple lenders.
More than 90% of private student loans taken out by undergraduates are cosigned by a parent, spouse, or friend. Given that parents usually have to cosign private student loans for their children, here are a couple of reasons they might take out a parent loan instead:
- Parents can take advantage of the student loan interest deduction.
- The student loan interest deduction can save up to $550 a year on your taxes.
- The loan must be in your name, so even if you’re making the payments on a loan that’s in your child’s name, you can’t claim the deduction.
- Children might not earn enough to benefit from the deduction (it’s a deduction, not a tax refund or rebate).
- Some parents might earn too much to claim the student loan interest deduction.
- Some parents might have an existing relationship with a bank that gets them a better rate.
- Some lenders offer loyalty discounts to existing customers that reduce their interest rate (typically by 25 basis points, or 0.25%).
- Similar autopay discounts are also available when you authorize automatic withdrawals from your checking or savings account.
- Students can often qualify for these discounts by opening an account of their own or authorizing payments from an existing account.
- Shop around and compare loans to find the best rate.
| Lender | Fixed rates from (APR) | Variable rates from (APR) | |
|---|---|---|---|
 | Check with lender | Check with lender | |
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 | 5.48%1 | 4.31%1 | |
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 | 4.64%2,3 | 2.72%2,3 | |
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 | Check with lender | Check with lender | |
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 | 5.49%9 | 5.00%9 | |
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Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available | 1Citizens Bank Disclosures | 2,3College Ave Disclosures | 7SunTrust Bank Disclosures | 8EDvestinU Disclosures | 9Sallie Mae Disclosures |
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Citizens Bank Student Loan Rate Disclosure Variable rate, based on the one-month London Interbank Offered Rate ("LIBOR") published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of February 1, 2020, the one-month LIBOR rate is 1.66%. Variable interest rates range from 2.69%-11.02% (2.69%-10.87% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.40%-12.19% (4.40% - 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co- signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school 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. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan. |
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Federal Parent PLUS Loans
Parent PLUS Loans let you take out loans on behalf of an undergraduate who has hit their borrowing limits on the more affordable federal loans. Graduate students can take out grad PLUS loans in their own name.
For your family to qualify, students must fill out the Free Application for Federal Student Aid (FAFSA). Just remember that Parent PLUS Loans carry higher interest rates and fees than other federal student loans.
Borrow up to full cost of attendance
With a Parent PLUS Loan, you can borrow up to the full cost of attendance at your child’s school, minus other financial aid they’ve received. Unlike private parent loans, you don’t have to demonstrate that you have enough income to repay Parent PLUS Loans. All that’s required is a basic credit check demonstrating you don’t have any major issues on your credit report.
This leads some families to take on more debt than they can easily repay. If you do have trouble making monthly payments on Parent PLUS Loans, you can enroll in an income-driven repayment plan that can make your monthly payments more manageable. First, you’ll have to convert your Parent PLUS Loans into a federal direct consolidation loan.
Interest rates on Parent PLUS Loans
Once you take them out, rates on federal student loans are fixed. But the rates assigned to new are adjusted before the start of each academic year on July 1. For the 2019-2020 academic year, the interest rate on PLUS loans is 7.08%.
When comparing rates on PLUS loans with private student loans, keep in mind that the 4.236% upfront fee on PLUS loans that can raise the APR by a full percentage point.
| PLUS loan repayment term | Interest rate | APR |
|---|---|---|
| 5 years | 7.08% | 8.83% |
| 10 years | 7.08% | 7.99% |
| 15 years | 7.08% | 7.7% |
| 20 years | 7.08% | 7.57% |
| 30 years | 7.08% | 7.43% |
| How the 4.236% upfront fee on PLUS loans affects annual percentage rate (APR). The shorter the loan term, the bigger the impact on APR. | ||
Federal PLUS loans vs. private parent student loans
Private student loans don’t offer many of the borrower protections provided with federal loans, like access to income-driven repayment (IDR) and loan forgiveness.
Federal PLUS loans taken out by parents aren’t eligible for most IDR plans. However, parents who take out PLUS loans can combine them in a federal Direct Consolidation Loan and then repay the new consolidation loan under an Income Contingent Repayment (ICR) plan.
Many private lenders are adopting features like grace periods and optional deferment. You might be able to make interest-only payments while the student is enrolled in school.
| Lender | Fixed rates from (APR) | Variable rates from (APR) | Loan repayment options |
|---|---|---|---|
 | 7.08% (APR depends on loan term) | N/A | Most federal repayment plans |
| Check with lender | Check with lender | 5 to 20 years |
| 5.48%1 | 4.31%1 | 5, 10 years |
| 4.64%2,3 | 2.72%2,3 | 5 to 15 years |
| Check with lender | Check with lender | 5, 7, 10 years |
| 5.49%9 | 5.00%9 | 10 years |
your credit score. 100% free! |
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Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available | 1Citizens Bank Disclosures | 2,3College Ave Disclosures | 7SunTrust Bank Disclosures | 8EDvestinU Disclosures | 9Sallie Mae Disclosures |
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Citizens Bank Student Loan Rate Disclosure Variable rate, based on the one-month London Interbank Offered Rate ("LIBOR") published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of February 1, 2020, the one-month LIBOR rate is 1.66%. Variable interest rates range from 2.69%-11.02% (2.69%-10.87% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.40%-12.19% (4.40% - 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co- signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school 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. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan. |
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Frequently asked questions
Is there a credit check required for a parent loan?
Borrowers applying for federal PLUS loans must pass a credit check. If you have adverse credit history such as unpaid bills, you might need a cosigner (known as an endorser), before you can be approved for a PLUS loan.
In addition to looking at your credit history, private lenders will also check your credit score and evaluate your ability to repay a loan before approving your request.
Do I need to submit the FAFSA to apply for parent loans?
No. To apply for a parent loan from a private lender, you will simply need to fill out the loan application on the lender’s website.
You do need to submit a Free Application for Federal Student Aid (FAFSA) for federal parent loans.
Find Out: How to Apply for FAFSA
What information or documents do I need?
Generally speaking, to apply for a loan from a private lender, you will need the following information:
- Personal information: Name, address, phone number, email address, date of birth, Social Security number
- Employment information: Any recent pay stubs or other proof of income
- Education information: Name of the school your child is attending, cost of attendance, details about any other student aid, graduation date
- Loan information: The loan amount you’re requesting and the loan period
Are there any parent loan fees?
Federal PLUS Loans taken out for the 2019-20 school year have a 4.236% loan disbursement fee — a fee that’s taken out of the loan before you even see the money. For loans paid back on the standard 10-year repayment plan, the fee has the same effect as adding about one percentage point to the annual percentage rate (APR).
Private student loans for parents can have application, origination or disbursement fees. But none of Credible’s partner lenders charge these fees.
Can I refinance my parent student loans?
Creditworthy borrowers can refinance Parent PLUS Loans and parent student loans from private lenders without being charged a prepayment penalty. Many lenders do not charge origination fees for refinancing either.
Learn How: Refinance Parent PLUS Loans
Can I transfer a parent loan to my son or daughter later?
Neither Parent PLUS Loans or private parent student loans can be transferred. But your child might be able to refinance them into their own name with a private lender if they have good enough credit. Or your child could act as your cosigner if you choose to refinance in your own name.
Learn More: Refinance Student Loans
What can I use a parent student loan for?
Parent loans can help you pay for your child’s college tuition and fees, as well as other indirect costs such as housing, books, food, and other living expenses.
How do I apply for a parent student loan?
Most universities allow you to apply for loans online, making the PLUS loan application process easy. But parents with dependent children can also turn to private lenders to take out private parent student loans to pay for their child’s education.
Before you turn to a federal direct PLUS loan, it’s worth comparing offers from private student lenders who provide loans to undergraduates, graduate students, and parents that are priced competitively with federal PLUS loans.
Credible makes it easy to check rates from many private student loan lenders without filling out multiple forms.
Keep Reading: Parent Student Loan Lenders vs. Private Student Loan Lenders
