Parent PLUS Loans vs. Private Loans: What Parents Need To Know

College often comes with a steep price tag, and many parents help shoulder the cost. 

In fact, according to a Discover Student Loans survey, 45% of parents plan to take out student loans to pay for their children's education. 

If you're a parent borrower, you have two main options: parent PLUS loans from the federal government and private parent loans from a bank, credit union, or online lender. 

Comparing parent PLUS loans vs. private loans can help you determine which option best fits your needs. 

Current private student loan rates

What are parent PLUS loans, and how do they work?

Parent PLUS loans are a type of federal student loan available from the Department of Education. They're available to biological and adoptive parents (and in some cases, stepparents) of dependent undergraduate students who are enrolled in school at least half-time. 

Parent PLUS loans have fixed interest rates and origination fees set by Congress each year. For loans issued between July 1, 2025, and July 1, 2026, the interest rate is 8.94% and the origination fee is 4.228%. 

While these costs are higher than some private loans, some parents opt for PLUS loans anyway for many reasons, including the fact that they're easier to qualify for.

“Despite relatively high interest rates, these loans can be attractive to some families because they have low credit requirements,” says Kate Lewis, college counselor and founder of College Search Guide. Specifically, you can qualify as long as you don't have adverse credit, which is defined as having:

• A combined debt balance greater than $2,085 that you're over 90 days delinquent on or that has been charged off within the last 2 years
• A default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or federal student loan write-off in the last 5 years 

If you have adverse credit, you can still get a parent PLUS loan by applying with a creditworthy endorser or documenting extenuating circumstances and completing credit counseling.

How much can you borrow using parent PLUS loans?

Currently, you can borrow up to the school-certified cost of attendance, minus any other financial aid received. However, beginning on July 1, 2026, new parent PLUS loans will be limited to $20,000 annually per student with an aggregate limit of $65,000. 

Parents with PLUS loans will also no longer qualify for any income-driven repayment (IDR) plans after July 1, 2026. Parents who borrow after that date must repay their debt on the new Standard Repayment Plan, which has fixed payments and a 10-to-25-year repayment time, depending on your loan amount. 

Existing parent borrowers can access the current Income-Contingent Repayment Plan (the only IDR plan for parent loans) if they consolidate before July 1, 2026. 

What are private parent student loans and how are they different from parent PLUS loans?

Private parent student loans come from private lenders, like banks, credit unions, and online lenders. The rates and terms on private loans vary depending on the lender, your credit score, and other factors. 

You'll need to meet a lender's requirements for credit and income to qualify, and borrowers with the strongest credit tend to get approved for the best rates. Unlike parent PLUS loans, many private loans don't have an origination fee. 

Private parent loan interest rates can either be fixed, meaning they stay the same over the life of the loan, or variable, meaning they fluctuate with market conditions. Many lenders offer online prequalification, which lets you view your estimated rates without impacting your credit. 

Unlike parent PLUS loans, private loans don't offer income-driven repayment plans or federal forgiveness programs. Your repayment options depend on the lender, and your repayment term typically spans five to 15 years.

Private lenders also offer student loans that you can cosign. By cosigning a student loan, you'll share responsibility for the loan and be expected to pay it back if the student falls behind. Cosigning can often help your child get approved and qualify for better interest rates. 

How do rates, fees, and repayment compare between private and federal loans for parents?

Here's how rates, fees, repayment options, and other features compare between the parent PLUS loan vs. private parent student loans: 

What borrower protections and forgiveness options apply to parent student loans?

Parent PLUS loans offer benefits that private loans don't. These benefits include: 

• Income-driven repayment: Parent PLUS loans issued before July 1, 2026, can be repaid using the Income-Contingent Repayment Plan if you consolidate the loans. This plan adjusts your payments to the lesser of 20% of your discretionary income or the amount you'd pay on a 12-year repayment plan. Any remaining balance is forgiven after 25 years. 
• Forgiveness opportunities: Parent PLUS loans are eligible for Public Service Loan Forgiveness (PSLF), which forgives your balance after 10 years of eligible payments while working full-time doing qualifying public service work. To pursue this program, you'll need to consolidate your parent PLUS loan and sign up for Income-Contingent Repayment. Since loans issued on or after July 1, 2026, aren't eligible for income-driven repayment, it's unclear if parents will have a path to forgiveness through PSLF once changes are implemented. 
• Loan discharge programs: Parent PLUS loans may be eligible for discharge in the event of death or disability. The balance could also be canceled due to school closure, false certification, or fraud. 

Private loans are not eligible for federal forgiveness programs or income-driven repayment plans, and repayment terms can vary significantly by lender. 

“In contrast to parent PLUS loans, private parent loans are purely lender-policy driven,” says Christopher Migliaccio, a lawyer and founder of Warren and Migliaccio L.L.P.  Migliaccio explains that private loans usually come with “limited repayment options, interest rates highly dependent on the creditworthiness of the borrower, and no forgiveness options typically.” 

Eligibility for forbearance can also vary, so if you experience financial difficulties, you'll need to reach out to your lender to discuss options for modifying or temporarily pausing your loan payments. 

Which type of parent student loan is best?

When it comes to choosing parent student loans, the right option depends on your credit, risk tolerance, and other factors. 

“The best type of parent student loan is different for every family,” says Lewis. 

Asking yourself these questions can help you decide which loan is best: 

• How strong is your credit? If you have excellent credit, you might get a better rate on a private loan than on a parent PLUS loan. A lower rate (and no origination fee) generally means the loan will be more affordable.  
• Are borrower protections a priority? If so, a parent PLUS loan could be the better fit, as it's eligible for deferment, forbearance, and discharge in certain circumstances. Just keep in mind that some rules will be changing for loans issued on or after July 2026.
• Do you want income-driven repayment? In this case, go with a parent PLUS loan so you can consolidate it and apply for the Income-Contingent Repayment Plan. 
• Do you work in public service? If you could qualify for the Public Service Loan Forgiveness program, you could get your parent PLUS loan forgiven after 10 years. “Parent PLUS loans can be desirable for parents who work in public service,” says Lewis. “[PSLF] can be a good option for dedicated public servants.” 
• Is keeping costs down your top priority? If you don't need federal benefits, compare options for both private loans and parent PLUS loans to find the most affordable borrowing option. 

“I would recommend parent PLUS loans if you are considering the value of federal protections or have variable income,” says Migliaccio. “Consider private loans only if you think you qualify for the top rates and have an absolute commitment to the lender's policies.”

Comparing the pros and cons of parent PLUS loans vs. private loans can also help you make an informed decision as a parent borrowing for college. Here's a side-by-side look: