Parent PLUS Loans vs. Private Student Loans: Which Is Better?

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

In fact, 74% of undergraduate families use parent income and savings to cover college costs, according to Sallie Mae’s How America Pays for College 2025 survey.

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. 

In this guide, we compare parent PLUS loans vs. private loans to determine which option best fits your needs.

Current private student loan rates

Parent PLUS loans vs. parent student loans

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

What are parent PLUS loans?

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. 

How do parent PLUS loans work?

Parent PLUS loans have fixed interest rates and origination fees set by Congress each year. For loans issued between July 1, 2026, and July 1, 2027, the interest rate is 9.07%, 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?

New borrowing limits for parent PLUS loans took effect July 1, 2026. For loans first disbursed on or after that date, parents can borrow up to $20,000 per year for each child, with a $65,000 lifetime limit per child. Previously, parents could borrow as much as the student’s full cost of attendance, minus other financial aid.

New parent PLUS loans are also no longer eligible for income-driven repayment plans, including the Repayment Assistance Plan (RAP). Instead, parent borrowers must repay these loans under the Tiered Standard Repayment Plan, which has fixed monthly payments and a repayment term of 10 to 25 years, depending on the amount borrowed.

What are private student 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. 

How do private student loans work?

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 much can you borrow using private loans?

Many private lenders will allow you to borrow up to your school’s total cost of attendance minus any other financial aid received, if you meet credit requirements and other qualifications.

However, most lenders also establish aggregate lifetime limits determined by your degree path and creditworthiness. Because these limits are typically higher than federal options, private loans can be a good resource to bridge college education financing shortfalls.

How to decide between parent PLUS loans and private student loans

When choosing between parent PLUS loans and private parent student loans, consider the following:

1. What interest rate can I qualify for?

If you have good credit and a steady income, private student loans may offer more competitive rates.

• Parent PLUS loans: PLUS loans issued to parents from July 1, 2026, to July 1, 2027, have an 9.07% interest rate, regardless of their credit. However, fees on PLUS loans can increase your APR by about one percentage point.
• Private student loans: Private loan borrowers with good to excellent credit and steady income may qualify for a lower rate. Over the length of your loan repayment, that lower interest rate could help you save significant money.

Check Out: Student Loan Options For Parents With Bad Credit

2. Do I want a variable-rate loan?

If you want to take advantage of a variable-rate loan, opt for a private parent student loan.

• Parent PLUS loans: Federal loans only have fixed interest rates.
• Private student loans: Private lenders may offer variable or fixed interest rates. Variable-rate loans tend to start with low interest rates and can fluctuate higher and lower over time. Fixed-rate loans have the same interest rate for the entire term. It may make sense to use a variable-rate loan if you intend to pay it off quickly.

3. Did I complete the FAFSA?

If you haven’t completed the FAFSA by the deadline or prefer not to, you can use a private parent student loan.

• Parent PLUS loans: Because they come from the federal government, parent PLUS loans require you to complete the FAFSA in order to qualify.
• Private student loans: Private student loans, on the other hand, don’t require you to fill out the FAFSA. Remember, your school may have to certify the cost of attendance to determine how much you’re eligible for.

4. Will I need access to federal benefits?

If you need benefits like deferment and forbearance, parent PLUS loans are a better choice.

• Parent PLUS loans: Federal student loans are eligible for deferments and forbearance, which allow you to postpone making your payments on your loans for a set period of time without becoming delinquent or damaging your credit.
• Private student loans: Private student loans aren’t eligible for federal benefits — so if you need these perks, make sure you apply for federal loans.

Learn More: What Is Public Service Loan Forgiveness?

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

Parent PLUS loans offer fewer benefits than they did before the federal student loan overhaul took effect July 1, 2026. 

New parent PLUS loans are no longer eligible for income-driven repayment plans or Public Service Loan Forgiveness (PSLF). Instead, they must be repaid under the Tiered Standard Repayment Plan, which assigns a 10-, 15-, 20-, or 25-year repayment term based on your total loan balance.

Parent PLUS loans still have some benefits. Interest rates are set by the government rather than based on your financial profile, and deferment and forbearance may be available if you temporarily can’t afford your payments.

Private student loans generally offer fewer protections because each lender determines its own loan terms. Your interest rate typically depends on your credit score and income, and private loans don’t offer a path to loan forgiveness.

Which type of 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.”

Pros and cons of each type of parent loan 

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: