search facebook-square linkedin-square twitter envelope android-arrow-forward

If you’re headed to college next fall for the first time or returning to school, you could just be realizing your financial aid package may not cover all of your expenses. That’s usually when borrowers start wondering about private parent student loans or the pros and cons of parent PLUS loans versus private loans.

The standard advice from college financial aid counselors is to round up all of the grants, scholarships, work-study and help from your family that you can before taking out any loans. And that’s good advice.

The other thing you’ll hear from financial aid counselors is that if you do need to borrow to fund your education, you should start with federal student loans. Also good advice — but keep in mind that there are several types of federal loans, and some are a better deal than others.

Quick navigation:

Student loan limits

Before you decide on which type of loan to get, it’s good to know what the limits are on each type. With subsidized and unsubsidized direct loans, there are annual and lifetime limits, depending on your dependent status.

YearDependent studentsIndependent students (or dependent students whose parents can’t obtain PLUS Loans)
First-year undergraduate annual loan limit$5,500 ($3,500 in subsidized loans)$9,500 ($3,500 of in subsidized loans)
Second-year undergraduate annual loan limit$6,500 ($4,500 in subsidized loans)$10,500 ($4,500 in subsidized loans)
Third-year and beyond undergraduate annual loan limit$7,500 ($5,500 in subsidized loans)$12,500 ($5,500 in subsidized loans)
Graduate or professional students annual loan limitn/a$20,500 (unsubsidized only)
Subsidized and unsubsidized aggregate loan limit$31,000 ($23,000 in subsidized loans)$57,500 for undergraduates ($23,000 in subsidized loans)
$138,500 for graduate or professional students ($65,500 in subsidized loans). Graduate aggregate limit includes all federal loans received for undergraduate study.

Once you move on to graduate school, you’re no longer eligible for direct subsidized loans, regardless of your financial need.

Federal vs. private student loans

Students with little income or credit history will typically need a cosigner to qualify for a private student loan. A cosigner can also help you get the best rate.

Cosigning a loan is no small responsibility — you are essentially asking your cosigner to take on all of your obligations to repay the loan if you cannot, sometimes without all the rights enjoyed by the borrower. The good news is, your cosigner won’t necessarily be taking on those obligations forever — many lenders will release the cosigner after the borrower has established a track record of making payments.

Graduate students and parents with any adverse credit history will need a cosigner — the government’s term is an “endorser” — to take out a PLUS loan.

When you take out a federal student loan, the interest rate is fixed for the life of the loan. Private student loans come in more flavors than government loans. Everyone who takes out the same type of government loan at the same time pays the same interest rate. Private student loans offer more options when it comes to rates and terms.

Find Your Student Loan

PLUS loans

For students who need to cover additional expenses at either the undergraduate or graduate level, there are PLUS loans for parents and graduate students.

You can pretty much take out all of the PLUS loans you need to cover school attendance costs that exceed the other financial assistance and loans you’ve received. The catch is that you’ll pay a price.

Parent PLUS loans are the riskiest federal student loans, because not only do they carry the highest interest rates of all federal loans, they also offer the least flexible repayment options. Unlike private lenders, the federal government does not evaluate the borrower’s ability to repay student loans. For borrowers taking out PLUS loans, only a basic credit check is performed.

You won’t be turned down for a PLUS loan unless you have adverse credit history (such as bills that are more than 90 days overdue, or a bankruptcy or foreclosure). The flip side is that because your ability to repay is not evaluated, it’s easy for parents to get in over their heads with PLUS loans.

A recent analysis by the think tank New America concluded that by making parent PLUS loans to borrowers without evaluating their ability to repay, then pursuing those who default into bankruptcy court, garnishing their wages and social security checks, and seizing tax refunds, the government may be engaging in “predatory lending practices.”

Parent PLUS loans are offered by the federal government. So, before you turn to a PLUS loan, it’s worth comparing offers from private student lenders, who provide student loans to undergraduates, graduate students and parents that are priced competitively with federal PLUS loans.

Private student loans

With private student loans, the interest rate depends on the borrower or cosigner’s credit risk, and whether you’d rather have a fixed-rate or variable-rate loan.

Pick a variable-rate private student loan, and you’ll start out with a better interest rate than you’d get on a fixed-rate private loan with the same repayment term.

If you’d rather have the certainty of a fixed-rate student loan, most private lenders offer those, too. You’ll pass up the chance to start out making lower monthly payments but if interest rates go up, your monthly payments will remain unchanged.

Also keep in mind that private student loans don’t offer some of the borrower benefits packaged with most federal loans, like access to income-driven repayment (IDR) plans and the potential for loan forgiveness after 10, 20 or 25 years of payments.

Parents taking out PLUS loans are expected to start making payments as soon as their loan is disbursed. Parents may request a deferment while their child is enrolled at least half-time and for an additional six months after their child graduates leaves school, or drops below half-time enrollment.

There are four common repayment plans for private student loans, although not all lenders offer each of them:

  • Immediate repayment (full monthly payments while still in school)
  • Interest-only repayment (you pay only the interest on your loan while you’re still in school)
  • Partial interest repayment (you make a flat monthly payment while still in school that only covers part of the interest you owe)
  • Full deferment (you pay nothing while you’re enrolled in school, and your loan balance grows)

Many private lenders are adopting borrower-friendly features like grace periods and optional deferment. Just keep in mind that interest will accrue during these periods, just as it does on unsubsidized federal direct loans and PLUS loans.

Compare rates from multiple lenders

Since private lenders compete for your business, it’s wise to:

  • Do your research and comparison shop. Remember that private lenders offer different types of loans on rates and terms that depend on the borrower — it can pay to shop multiple lenders before you commit to one. Credible’s online comparison tool lets you find the actual rates you could qualify for with multiple, vetted lenders, saving you time and effort.
  • Keep an eye out for discounts. Many student lenders offer discounts to borrowers who agree to have payments automatically deducted, for example, so be sure to check for such offers.
  • Boost your chances by applying with a cosigner. Getting the best interest rate on private student loans depends largely on credit history. As a student, it’s likely that you haven’t had enough time to establish your credit. But if you have a parent, legal guardian, friend, or employer who’s willing to help, you can ask them whether they’d be willing to cosign a loan for you.

The companies in the table below are Credible’s approved partner lenders. Whether you’re the borrower or cosigner, Credible makes it easy to compare rates from multiple private student loan providers without affecting your credit score.

LenderFixed Rates From (APR)
Variable Rates From (APR)Get Rates Through Credible
ascent

View details
4.22%+3.71%+Get Rates
Ascent review

  • Loan terms: 5 or 10 years (Ascent Tuition loan, 15-year term also available with variable-rate loans); 10 years (Ascent Independent loan, 15-year term also available with variable-rate loans)
  • Loan amounts: $2,000 minimum, up to school's cost of attendance within $200,000 cap
  • Repayment plans: Defer payments or make interest-only or $25 minimum monthly payment while in school
  • Application fees: No application, origination, or disbursement fees
  • Discounts: 0.25% automatic payment discount, 1% cash back graduation reward Cosigner release option: Cosigner release available after 24 months of consecutive monthly on-time payments
  • Eligibility: Ascent Tuition: Minimum FICO 600 (borrower with cosigner) and 660 (cosigner). Cosigner not required for Ascent Independent loan. No minimum income or credit score requirement for borrowers with less than two years of credit history. Borrowers with two years of credit history need 680 credit score and $24,000 annual income.
  • Loan servicer: University Account Service (UAS)
citizens

View details
4.40%+¹3.29%+¹Get Rates
Citizens Bank review

  • Loan terms: 5, 10, 15 years
  • Loan amounts: $1,000 minimum, school’s cost of attendance up to $150,000 for undergraduates and graduate degrees; $225,000 MBA and law; $350,000 medical school and parent loans)
  • Repayment plans: Pay immediately, pay interest only, or defer payments
  • Application fees: No application, origination, or disbursement fees
  • Discounts: 0.25% loyalty discount available (if you have another qualifying account with Citizens Bank) as well as a 0.25% automatic payment discount
  • Cosigner release option: Cosigner release available after 36 months of consecutive monthly on-time payments
  • Eligibility: U.S. citizens or permanent residents; international students can apply with a creditworthy U.S. citizen or permanent resident cosigner
  • Loan servicer: Firstmark Services
collegeave

View details
4.72%+2
3.96%+2Get Rates
College Ave review

  • Loan terms: 5, 8, 10, 15 years
  • Loan amounts: Up to 100% of the school-certified cost of attendance ($1,000 minimum)
  • Repayment plans: Make full principal and interest, interest only, or flat payments while in school; or defer payments until six months after leaving school
  • Application fees: No application, origination, or disbursement fees
  • Discounts: 0.25% rate deduction with autopay
  • Cosigner release option: Cosigner release available once more than half of the scheduled repayment period has elapsed.
  • Eligibility: Available to all U.S. residents attending an eligible undergraduate or graduate school
  • Loan servicer: University Accounting Service LLC
discover

View details
4.74% - 12.99%6
3.37% - 11.87%6Get Rates
Discover review

  • Loan terms: 15 years (undergraduate) or 20 years (graduate, MBA and professional loans)
  • Loan amounts: Up to 100% of the school-certified cost of attendance
  • Repayment plans: Defer payments until 6 months after leaving school, or make interest only or fixed monthly payments while enrolled.
  • Application fees: No application, origination, or disbursement fees
  • Discounts: 0.25% autopay discount; good grade award (one-time cash reward for each new loan for earning 3.0 GPA or equivalent)
  • Cosigner release option: Not offered
  • Eligibility: U.S. citizen, permanent resident or international student (international students require a cosigner who is a U.S. citizen or permanent resident). Be 16 years or older at the time you apply
  • Loan servicer: Discover Bank
edvestinu

View details
4.50%+
4.40%+
Get Rates
EDvestinU review

  • Loan terms: 7, 10, 12, 15 and 20 years
  • Loan amounts: Minimum loan amount of $1,000 up to school-certified cost of attendance with $200,000 cap
  • Repayment plans: Full deferment, interest-only payments, and principal and interest payments
  • Application fees: No application, origination, or disbursement fees
  • Discounts: 0.5% autopay discount
  • Cosigner release option: Cosigner release available after 24 months of on-time payments
  • Eligibility: Borrower or cosigner (if applicable) must have a minimum income of $30,000. Must be U.S. citizen or permanent resident, admitted to or enrolled at least half-time at any title IV degree-granting college and university when applying.
  • Loan servicer: Granite State Management & Resources (GSM&R)
invested

View details
4.63%+3.70%+Get Rates
INvested review

  • Loan terms: 5, 10, 15 years
  • Loan amounts: Up to 100% of school certified cost of attendance (minimum $1,001)
  • Repayment plans: Full principal and interest, interest only, and full deferment
  • Application fees: No application, origination, or disbursement fees
  • Discounts: 0.25% autopay discount; 2% principal reduction upon graduation
  • Cosigner release option: Applications accepted after 48 consecutive monthly principal and interest payments
  • Eligibility: Indiana residents enrolled in college and U.S. residents attending an eligible Indiana school
  • Loan servicer: American Education Services
mefa

View details
3.95%+n/aGet Rates
INvested review

  • Loan terms: 10 or 15 years
  • Loan amounts: Minimum $1,500 (public school) or $2,000 (private school). Maximum up to school’s certified cost of attendance (minus other aid received)
  • Repayment plans: Immediate, interest-only, or deferred
  • Application fees: No application, origination, or disbursement fees
  • Discounts: None
  • Cosigner release option: Cosigner release available after 48 on-time payments and meeting credit requirements
  • Eligibility: U.S. citizen or permanent resident
  • Loan servicer: American Education Services (AES)


View details
4.74% - 11.35%9
3.37% - 10.75%9
Get Rates
Sallie Mae review

  • Loan terms: 5 to 15 years
  • Loan amounts: Up to 100% of the school-certified cost of attendance
  • Repayment plans: Make interest-only or fixed monthly amount while in school, or defer payments until six months after leaving school
  • Application fees: No application, origination, or disbursement fees
  • Discounts: 0.25% autopay discount
  • Cosigner release option: Available after making 12 on-time principal and interest payments and meeting credit requirements
  • Eligibility: U.S. Citizen or U.S. Permanent Resident. Non-U.S. citizen students, including DACA students attending a school located in the U.S., are eligible to apply with a creditworthy cosigner who is a U.S. citizen or U.S. permanent resident.
  • Loan servicer: Sallie Mae


View details
4.30%
3.63%
Get Rates
SunTrust Bank review

  • Loan terms: 7, 10, or 15 years
  • Loan amounts: $1,001 - $65,000 (up to $95,000 for graduate students)
  • Repayment plans: Immediate or make partial, interest-only or deferred payments while in school.
  • Application fees: No application, origination, or disbursement fees
  • Discounts: 0.25% autopay discount; 0.25% loyalty discount; other special rewards may include principal reduction at graduation, rate reduction for on-time payments, or zero interest for six months
  • Cosigner release option: Cosigner release after 36 months of consecutive on-time payments
  • Eligibility: U.S. citizens or permanent resident, not available to permanent residents of Iowa or Wisconsin. Union Federal Private Student Loan available to international students with an eligible cosigner who is a U.S. citizen or permanent resident
  • Loan servicer: American Education Services (AES)
Compare rates without affecting
your credit score. 100% free!


Compare Now

Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available | 1Citizens Bank Disclosures| 2,3College Ave Disclosures | 9Sallie Mae Disclosures | 6Discover Disclosures


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 August 1, 2019, the one-month LIBOR rate is 2.26%. Variable interest rates range from 3.29%-11.62% (3.29%-11.47% 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.