Best parent student loans of September 2024

Many parents hope to save enough to cover their child’s education, but it’s not uncommon to fall short. While three out of four parents have started saving for college, most are on track to cover just 27% of their funding goal by the time their child turns 18, according to a recent Fidelity survey.

Enter parent student loans, a type of debt designed to help families pay their child's education expenses. Here are some of the best parent student loans to consider.

Compare parent student loan rates

Best private parent student loan lenders

While federal options for parent student loans are available, private student lenders can sometimes offer families a good alternative. Well-qualified parent borrowers may score lower interest rates on the private market, though it pays to comparison shop before submitting an application.

Other parent loans to consider

SoFi: Best for member perks

Online lender SoFi offers fee-free loans to parents at competitive rates. And they really mean fee-free: SoFi doesn’t even charge late fees, something few lenders can match. Borrowers can opt to start repayment immediately (which results in the lowest total interest costs), or can make interest-only payments while their child is enrolled in school.

SoFi is also known for its ample member benefits. Loan holders can access free or discounted financial coaching, estate planning, travel deals, and even a hotline dedicated to answering your questions about paying for college.

ISL: Best for low rates

Iowa Student Loan Liquidity Corporation (ISL) is a nonprofit organization that offers loans for parents or other family members looking to help pay for a student’s education. Despite the lender’s name, applicants in all states except Maine are accepted.

You can borrow up to your child’s full cost of attendance, and opt for immediate payments, interest-only payments while your child is enrolled, or defer all payments until after the student graduates.

Federal parent student loans

In addition to the private student loans listed above, many parents are surprised to find that they’re also eligible for federal student loans. Parent PLUS loans are offered to eligible parents by the U.S. Department of Education.

Parent PLUS loans have a fixed, flat interest rate that isn’t based on your credit (however, you may not qualify with adverse credit). For the 2023-24 school year, the interest rate is 8.05%. In addition, the Department of Education charges a one-time loan fee of 4.228%.

You can borrow up to the school's cost of attendance, minus any additional support your child is eligible to receive. Eligible applicants include biological or adoptive parents of dependent undergraduate students enrolled at least half-time in a qualifying school. In some instances, stepparents may also be eligible.

Pros and cons

Parent PLUS loans have pros and cons to consider when comparing the best parent student loans.

Pros

• Fixed interest rates that aren’t determined by your credit
• You can defer payments while your child is enrolled at least half-time and for six months after they graduate or leave school
• Can access federal benefits, such as flexible repayment options to help keep payments affordable

Cons

• Borrowers with adverse credit may have trouble getting approved, though credit standards are generally more relaxed than those of private lenders
• Higher interest rates and loan fees than federal student loans geared toward students
• Interest accrues during deferment periods
• Parent borrowers with good credit may find better rates and lower fees on the private market

Methodology

We evaluated these student loan lenders based on interest rates and origination fees, loan amounts, loan terms, discounts, whether cosigners are accepted, and more. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date. Read our full methodology for more details.

What is a parent PLUS loan?

A parent PLUS loan is a federal student loan that parents take out to help pay for their child's undergraduate education. You can borrow up to the cost of attendance at your child's school, minus any other financial aid received. This type of loan, issued by the Department of Education, has a higher fixed interest rate than Direct Subsidized or Unsubsidized Loans, but it's the same for anyone who borrows for the same school year.

Tips for comparing college loans for parents

One of the most important tips when comparing college loans for parents is to understand your options. You can choose either a federal parent PLUS loan from the Department of Education or a private student loan from a bank, credit union, or online lender. While federal loans come with benefits like access to loan forgiveness, private student loans may be a better choice if you have excellent credit and can get a lower interest rate.

Another tip is to consider factors beyond just the interest rate. As you compare loans from different lendrs, be sure to review the following factors:

• Loan amounts
• Repayment options
• Credit requirements
• Fees
• Discounts
• Customer service quality

Federal vs. private student loans for parents

The main difference between private and federal loans for parents is who originates the debt. Private loans come from institutions like online lenders, banks, and credit unions. Federal loans are backed by the Department of Education, and come with special federal benefits.

Here are other important differences:

• Private student loans may offer a choice of fixed or variable interest rates, depending on the lender.
• Borrowers with excellent credit may qualify for lower interest rates on private loans than what’s offered on parent PLUS loans.
• Private student loans generally can’t be deferred as easily as federal student loans.
• Parent PLUS loans have graduated and extended repayment plans to make payments more affordable.
• Private lenders may offer hardship programs, but don't have loan forgiveness programs like federal student loans.

If you’re trying to choose between a parent PLUS loan and a private student loan, consider the following questions:

• What’s your credit history? You may get better interest rates from a private student lender if you have excellent credit. All parent PLUS borrowers get the same interest rate based on when they borrow the funds — not their credit score. If you have fair credit, a parent PLUS loan might offer better rates.
• What are your repayment plans? Parent PLUS loans have a 10-year standard repayment term but can be extended with a Graduated Repayment or Extended Repayment plan. Private student loans tend to come with shorter loan terms, allowing you to pay off debt faster and potentially pay less interest.
• Will you use federal protections? Federal student loans offer flexible forbearance options, which allow you to temporarily stop or lower your loan payments while you’re having financial difficulties. Private lenders can set their own policies; some offer similar benefits, but many may not be as generous.

How to apply for parent student loans

Applying for parent PLUS or private student loans is straightforward. Here’s how to get started:

• Parent PLUS loan: To get a parent PLUS loan, your child must have filled out the Free Application for Federal Student Aid (FAFSA). Once they’ve completed the FAFSA, you can usually apply for a parent PLUS loan online, although some schools have a different application process. After applying (and receiving approval), you'll sign a Master Promissory Note (MPN) and the funds will be sent directly to your student’s school.
• Private parent loan: Lenders make the private student loan application process fairly straightforward. You don't have to worry about the FAFSA. Instead, you can apply online for the loan directly with the company you want to borrow from. Once approved, funds are typically sent straight to your child’s school.

Should the parent or student borrow for college?

As a parent of a college student, you might feel responsible for covering your child's college costs, or you may worry about putting a financial burden on your child. However, there are benefits of students borrowing for college.

Students usually have access to federal loans with lower interest rates, and there are more hardship options for students who can’t afford to repay the loan. In addition, student loans can help young adults build credit, which can take years.

If your student can't qualify for enough student loan funding to cover 100% of their expenses, and you're considering parent borrowing, here are some alternatives:

• Cosign a loan: Parents can cosign a student loan application, making it easier for students to qualify. The higher credit scores and income that parents bring to the application make it easier for lenders to approve the loan, while the student can still begin to build their credit. Note that cosigning a loan means that both you and your student are equally responsible for the debt.
• Help with payments: Parents may be able to help their children with loan payments by providing them with funds to cover the costs without the burden of taking loans out in their own names.

Parent student loan FAQ

Are parent student loans being forgiven?

Parents generally have the same loan forgiveness options as students, including the Public Service Loan Forgiveness (PSLF) program. To qualify for PSLF, you must be employed by a government or not-for-profit organization, be on an income-driven repayment plan, and make 120 qualifying payments.

Note that parent PLUS loans must be consolidated before becoming eligible for income-driven repayment.

Can a parent loan be transferred to the student?

There is no federal process to transfer a parent PLUS loan to the student. However, some private lenders allow parents to refinance student loans in their child’s name. Note that privately refinancing federal loans means you’ll lose access to all federal benefits.

If you think you may want to transfer the debt to your child, reconsider borrowing parent loans. Instead, consider alternatives like cosigning a loan in your child’s name or helping them with payments.

What credit score do I need for a parent student loan?

Most private lenders require a minimum FICO credit score in the mid- to high-600s to qualify for a parent loan.

Federal loans have less rigorous requirements. You don’t need a specific credit score for a parent PLUS loan, but you cannot have an adverse credit history. An adverse credit history includes:

• Having debts that are 90 days or more delinquent or have been sent to collections or charged off in the past two years
• Having a default, bankruptcy, foreclosure, repossession, tax lien, wage garnishment, or write-off or a federal student aid debt within the last five years