Best Parent Loans for College: Parent PLUS and Private
A college education is a worthy investment, and making a well-considered choice on financing options can get you the best savings. When it's time to send your kids off to college, it's important to evaluate a variety of loans and choose the best one for your family's situation. Check out our top picks for the best student loans for parents and our guide to borrowing for your child's education below.
Our Top Picks for Best Parent Loans for College
- Direct Parent PLUS Loans: Best Federal Student Loan for Parents
- Iowa Student Loan (ISL) Education Lending: Best Student Loans for Parents with Bad Credit
- College Ave: Best School Loans for Parents of Undergraduate Students
- Rhode Island Student Loan Authority (RISLA): Best School Loans for Single Parents
- Earnest: Best College Loans for Parents with High Income
Best Parent Loans for College Reviews
Best Federal Student Loan for Parents: Direct PLUS Loans
- Open to fair/subprime credit
- Potential forgiveness via PSLF
- Can borrow the amount of cost less school-issued financial aid
- Fixed interest rate
- Requires a credit check
- Flat fee that comes directly out of the loan
- Can't borrow more than the cost of education expenses
Why we chose it: Parents seeking a federally subsidized loan should consider Direct PLUS Loans for parents. Parent PLUS loans have a fixed interest rate for the length of the loan, which can help with financial planning and prevent an increase in payment amounts if interest rates rise. Parents with lower credit scores can still qualify, which opens up borrowing to a wider range of subprime customers.
Parent PLUS loans may be deferred as long as the student is in school at least half-time or for six months after graduation. During this time, interest will continue to accrue.
To be eligible for a parent PLUS loan, parents must:
- Meet the general criteria for federal student aid
- Pass a credit check that demonstrates a non-adverse credit history, such as no bankruptcies, foreclosures, repossessions or defaults in the last five years
- Be the biological or adoptive parent of the student who enrolls at an eligible school for half-time or more
There is a flat percentage fee associated with PLUS loans. This fee is directly subtracted from the requested loan amount, so you will receive a lower total than you requested.
Parents may borrow the entire cost of their child's education minus the total amount of financial aid issued by the school. After filling out FAFSA, parents may use the online application for a parent PLUS loan or apply through their child's school's application process as specified.
Parents may repay PLUS loans with three repayment plans:
- Standard: Monthly fixed payment for up to ten years.
- Graduated: Payments begin as a lower amount and then increase at two-year intervals for up to 10 years. Payments will not be less than the interest accruing between payments or more than three times greater than the preceding payments.
- Extended: Payments may be fixed or graduated and made for up to 25 years. This extended term means payments are generally lower than alternative repayment plans.
Parent PLUS loans may also be consolidated under a Direct Consolidation Loan. Once this is complete, an income-contingent repayment plan option may be available. You may also be able to refinance parent PLUS loans with a private lender to lower your interest rate.
Parent PLUS loans are among the few loans eligible for Public Service Loan Forgiveness (PSLF). For qualified professionals, the balance of the loan may be forgiven after you have made 120 payments.
Best Student Loans for Parents with Bad Credit: Iowa Student Loan (ISL) Education Lending
- Fair credit option
- No upfront fees
- Borrow up to the cost of attendance minus financial aid
- Lower fee rates due to nonprofit status
- No variable interest option
Why we chose it: It can be extremely difficult for parents with bad credit to qualify for private student loans, but Iowa Student Loan (ISL) Education Lending does make it possible for parents in the fair credit range to borrow with the College Family Loan. So even if you're working on rebuilding your credit, if you have a FICO score of at least 660, you may be able to qualify for this parent loan.
Though ISL may be more lenient with credit scores, parents must not have defaulted on student loans or have an active bankruptcy case to be eligible. You and your student must meet general low eligibility requirements, such as being a U.S. citizen or permanent resident and attending a qualifying program.
You can borrow up to the amount of attendance, subtracting the amount of aid received. There are no origination, prepayment, late or other fees with an ISL loan. Loans come at a fixed annual rate, with some lower ranges than other currently available loans. ISL's nonprofit status helps to reduce rates and bring them closer to Parent PLUS rates. Borrowers can earn a 0.25% interest rate reduction when using auto-pay.
Repayment options include immediate, interest-only and deferred. This gives borrowers the freedom to choose to pay both principal and interest while the student is in college, just interest, or to begin paying both after school. Interest rates increase with the length of time it takes to begin paying back the loan. ISL does not offer variable interest rates, so if rates fall after you take out the loan, you won't benefit.
Best Loans for Parents of Undergraduate Students: College Ave Student Loans
- Gives borrower some control of the funds
- Open to family members besides parents
- Flexible repayment plans and terms
- On the high end of rate range
Why we chose it: For a parent college loan with desirable interest rates, no fees and flexible repayment options, check out College Ave Student Loans.
College Ave parent loans are also open to more family members than simply biological or adoptive parents. Grandparents, guardians, aunts, uncles or other family members who wish to contribute to educational expenses may take a College Ave parent loan as long as they have eligible credit history and income. Borrowers may take up to 100% of the cost of college attendance.
College Ave offers a variety of repayment terms for parents taking out loans. You can choose between fixed or variable interest loans, with a wide range of interest rates depending on the borrower's financial profile. These rates may be reduced with an auto-pay discount.
Parents may also choose one of three repayment plans:
- Interest only: Only interest payments are made while the student is in school. Though initial payments are low, you pay the most over time with this option.
- Interest plus: Pay interest plus whatever amount you can afford, which helps to lower your costs while keeping lower payments.
- Full principal and interest: If you begin paying both principal and interest while the student is in school, you'll have the highest monthly payments but save the most overall.
Loan terms range from five to 15 years. College Ave discloses that 73% of customers opt for 10-year terms or less.
Best School Loans for Single Parents: Rhode Island Student Loan Authority (RISLA)
- Competitive interest rates
- No upfront fees
- Available for non-matriculating students
- $50,000 maximum
- Income requirement of at least $40,000
Why we chose it: Single parents borrowing for a child's education do not have the advantage of multiple incomes, so Rhode Island Student Loan Authority's (RISLA) lower-interest and zero up-front fee approach can help to reduce overall costs.
RISLA offers fixed-rate loans with auto-pay options for parent loans. There are no up-front fees. The standard repayment term is 120 months or 10 years. Repayment begins 15 days after the final disbursement.
Estimated monthly payments average about $112 to $128 for every $10,000 borrowed. For a $25,000 loan, monthly payments would average between $280 to $320 for most borrowers. Borrowers must take out a minimum of $1,500 per year up to a maximum of $50,000 per year. The borrowed amount may not exceed the total cost of attendance, less financial aid.
To qualify for a RISLA loan, borrowers must have adequate credit, meet a minimum income requirement (currently $40,000 per year), and have a qualifying debt-to-income ratio. Students must be U.S. citizens or permanent residents who are attending an eligible institution. Loans are also available to non-matriculating students, making them more flexible for parents of students enrolled in certificate or other non-degree programs. There is some advantage to either being a Rhode Island resident or attending a school in Rhode Island, but it is not required to receive a loan.
Best College Loans for Parents With High Income: Earnest
- Fixed and variable rates
- Rate match options
- Variety of repayment options
- Must be a U.S. citizen or permanent resident to be eligible
Why we chose it: Since students from families with high incomes may not qualify for financial aid, a loan company like Earnest that covers up to the total cost of attendance can be ideal. Parents can assist their students by borrowing as much as is needed for their education. The minimum borrowing requirement is $1,000 per year.
Payments have an element of flexibility at Earnest, including different rate options and term options. Rates may be variable or fixed. On top of this, you may turn on auto-pay from a checking or savings account to save an additional 0.25% on your payments. Earnest is willing to rate-match if you get a better rate offer elsewhere.
To be eligible, you must make at least $35,000 and have a FICO score of at least 650. Parents must be citizens or permanent residents of the U.S. to take out a parent loan through Earnest; since the company doesn't allow you to use a co-signer, there's no way to get around this requirement.
Earnest offers flexible repayment options, including:
- Deferred: Put off paying while the student is enrolled and for nine months after graduation. The most interest will accrue this way.
- Fixed: During school and the first nine months thereafter, payments are $25 per month. Full minimum monthly payments begin after that.
Other parent loans for college we considered
We considered a variety of student loan companies offering parent loans based on rates, loan limits, credit requirements and repayment plans. The following companies have solid loan options that may work for some parents but didn't quite measure up to our choices above.
Brazos Higher Education Loans
- Low fixed rate
- No fees
- Up to 100% coverage for cost of attendance
- Only available to Texas residents
- Minimum 720 credit score
- Minimum $60,000 income
The parent loan from Brazos Higher Education is noteworthy for its exceptionally low fixed interest rate with qualifying credit history and a .025% auto-pay deduction.
Why Brazos didn't make the cut: You need to live in Texas — and have a credit score of 720 with an income of at least $60,000 — to qualify for these loans. So while this is a great option for a parent loan, only a small fraction of borrowing parents will be eligible.
Discover
- No fees
- 15-year repayment period
- No prepayment penalty
- Higher rates compared to other loans
- Low aggregate loan limits
- Repayments after final disbursement
If you're looking for a familiar name in lending that you may already have a relationship with, Discover Parent Student Loans offer a trustworthy option. These no-fee loans can help you get up to 100% of the cost of attendance covered.
Why Discover didn't make the cut: Discover's rates come in on the higher end for both fixed and variable options. These higher rates combined with aggregate loan limits make Discover a less favorable borrowing option. A lack of repayment flexibility also makes these loans less attractive.
Citizens Bank
- Interest rate discounts
- No fees
- Well-known bank
- Lifetime aggregate limit
- Mid-tier rates
Another familiar name in parent lending is Citizens Bank, which has been awarding student loans for over 40 years. With a trustworthy reputation and decent rates, Citizens may be an attractive option for parents looking to borrow from a large, well-known institution.
Why Citizens didn't make the cut: The lifetime aggregate limits of $150,000 for undergraduate degrees may not meet the needs of parents paying for education at more expensive universities. If you are facing a tuition bill higher than $37,500 per year, the Citizens parent loan may not offer enough coverage.
Parent Loans for College Guide
If you're getting ready to help your child with education costs, you'll want to know how much money to borrow for college and how student loans work for parents. Getting the answers to these questions can make or break your college financial plan. This guide about parent loans for college covers the important facts about borrowing for your student.
What is a parent loan?
A parent loan is an education loan taken out for a student's education by their parents or eligible guardians. The parent or parents are responsible for the repayment of the loan, not the student. Parent loans do not affect a student's credit score, which is one of the main reasons some parents seek them.
Parent loans are available as federal or private loans. They are available up to a specific limit or for an amount that covers the total cost of attendance. Cost of attendance includes the following educational expenses:
- Tuition
- Fees
- Book and supply fees
- Room and board or private housing, including utilities
- Meal plans
- Transportation costs
- Dependent costs such as daycare
How do student loans work for parents?
Student loans work for parents by permitting you to borrow a set amount for your child's education from the federal government, a bank or an educational lender. You qualify for these loans based on your income and credit score, not your child's.
The loans are often for a maximum of the school's attendance cost minus any other financial aid received. Lenders disburse the loans directly to schools to cover student bills for books, fees and tuition.
These loans are offered with fixed or variable interest rates and multiple repayment options. Repayment may begin as soon as the loan is disbursed or deferred while the student is in school and for several months after graduation. Interest still accumulates during this deferral period.
How to apply for parent student loans
You may apply for parent student loans by submitting the requested application information online. Applications typically ask for basic information such as your:
- Identifying information including name, phone number, address
- Date of birth
- Citizenship status
- Social Security number
- Income
- Student information
- School and cost information
- Financial aid details
- Requested loan amounts
Many student loan lenders will run a credit check to see if you qualify for one of their loans. But seeing if you pre-qualify for student loans may not affect your credit score, so verify with each lender if pre-qualifying first will result in a hard pull or not.
How to apply for a Parent PLUS loan
You can access the online Direct PLUS Loan application directly from the U.S. Department of Education's website. Some schools may request that you submit the application through a separate process; in that case, you would receive instructions from their individual financial aid office.
Remember to submit your student's FAFSA form first and remove a credit freeze if you have one in place to prepare for a credit check.
How to apply for private parent student loans
When applying for private parent student loans, parents must submit applications directly to private lenders. These may be banks or lenders set up specifically for educational lending.
They will ask for identifying information, income amounts and the total requested loan amount. You will also need to undergo a credit check for most lenders. Your credit will help decide your loan rates, so improving your credit before applying for a private parent student loan is a good idea.
Parent Loans for College FAQs
What is a Parent PLUS loan?
A parent PLUS loan is a federal loan available for parents to take out on behalf of their dependent undergraduate student. You may use the funds for educational expenses and borrow up to the cost of attendance, less other financial aid. Parent PLUS loans have a fixed rate and may be more appropriate for parents with fair or better credit.
How does a Parent PLUS loan work?
Parent PLUS loans work by lending up to the amount of cost of attendance less any offered financial aid to the parent applicant for their child's education. These funds may be used for educational expenses. Parent PLUS loans may be deferred while the student attends school at least half-time and up to six months after graduating. Interest accrues during deferment periods. If a borrower does not choose a deferment, payments begin after the loan is fully distributed. Schools may assist in receiving and applying the loan funds after you sign a Master Promissory Note. Any amount exceeding school fees may be issued to the student.
Parent PLUS loans come with a fee. This is taken directly from the loan disbursement and does not require a separate payment. Loans are issued at a fixed interest rate. When it is time for repayment, Parent PLUS loans may be repaid on standard, graduated or extended repayment plans. If the loan becomes subject to consolidation, parents may also utilize an income-contingent repayment plan.
Can Parent PLUS loans be forgiven?
Parent PLUS loans are eligible for forgiveness through Public Service Loan Forgiveness (PSLF).
Employees of U.S. federal, state, local or tribal governments, as well as not-for-profit organizations, may be eligible for PSLF. This program forgives balances on Direct loans, including parent PLUS loans, after 120 qualifying monthly payments. These payments must be made under a qualifying repayment plan while you work full-time for a qualifying employer.
If you pursue PSFL for a parent PLUS loan, you must use an income-contingent repayment plan. To do so, you will need to consolidate any parent PLUS loans you have into a direct consolidation loan.
Parent PLUS loan vs private loan: which is the better option for parents?
Whether or not a parent PLUS loan or a private loan is the better option for parents depends on your financial profile, particularly your credit score and income. When parents borrow with a federal student loan, they may be eligible for things like income-based loan repayment, deferments, forbearance and Public Service Loan Forgiveness. All of these options can help protect borrowers if your financial situation becomes difficult so that you may continue safely paying your loans.
Borrowing from a private student loan lender may provide a lower interest rate or more favorable repayment options. Private lenders may offer grace or deferral periods. They also have more control over what fees to charge. To know which option is best for you, parent borrowers must consider the details of their financial situation along with the protections and savings each loan type offers.
How We Chose the Best Parent Loans for College
Our methodology for creating our list of best parent student loans included the following factors:
- Loan terms such as length of repayment and the ability to defer
- Loan costs, including potential fees and interest rates, as well as any prepayment penalties
- Repayment options, including the ability to choose interest only, graduated payments or full payments
- Eligibility requirements like citizenship status, minimum desired credit score and minimum desired income
- Maximum loan amounts
- Ease and accessibility of the application processes
Summary of Money’s Best Parent Loans for College
- Direct Parent PLUS Loans: Best Federal Student Loan for Parents
- Iowa Student Loan (ISL) Education Lending: Best Student Loans for Parents with Bad Credit
- College Ave: Best School Loans for Parents of Undergraduate Students
- Rhode Island Student Loan Authority (RISLA): Best School Loans for Single Parents
- Earnest: Best College Loans for Parents with High Income