7 best student loans for parents
Parents can either take out a student loan on their own or become a cosigner on their child’s student loans
Student loans for parents can help you cover the cost of your child’s education. Here’s what to consider when taking out a student loan. (iStock)
If you want to help your child pay for their college education with student loans, you can cosign their loans or take one out on your own.
As a cosigner, you’re only responsible for the loan if the primary borrower is unable to make their payments. But if you take out a parent loan, you’re the primary borrower and are entirely responsible for repaying the loan.
Whether you intend to cosign or borrow as a parent, it’s a smart idea to compare loans to see which is the best fit.
- 7 best private student loans for parent cosigners
- What is a federal Parent PLUS Loan?
- Who should take out a private student loan: The student or the parent?
- How to apply for a private student loan to cover school and living expenses
- Parent PLUS Loans vs. private parent loans
- Student loans for parents FAQs
7 best private student loans for parent cosigners
The following seven Credible partner lenders offer student loans for parents.
Ascent: Best for discounts
Ascent offers several discounts, including a 1% cash back graduation reward and a 0.25% autopay discount.
- Minimum credit score: 540
- Terms: 5, 7, 10, 12, 15, 20 years
- Maximum loan amount: $200,000
Pro
- Offers cosigner release after 24 months of consecutive, on-time payments
Con
- Doesn’t offer student loans directly to parents (only cosigned loans)
Citizens: Best for high loan amounts
Citizens offers both cosigned and parent student loans. Existing customers can qualify for a 0.25% loyalty discount, and all borrowers can get a 0.25% autopay discount.
- Minimum credit score: 720
- Terms: 5, 10, 15 years
- Maximum loan amount: $350,000
Pro
- No application, origination, or disbursement fees
Con
- May be harder to qualify if you don’t have good credit
College Ave: Best for repayment options
College Ave offers loans up to the school’s cost of attendance after taking into account any financial aid received. A unique feature is that parents can opt to have $2,500 of the loan funds sent to them directly so they can manage additional education-related expenses for their child.
- Minimum credit score: Does not disclose
- Terms: 5, 8, 10, 15, 20 years
- Maximum loan amount: Up to cost of attendance
Pro
- Parents can control how some of the loan funds are used
Con
- Cosigner release not available until more than half of the loan repayment period has elapsed
EDvestinU: Best for low loan amounts
EDvestinU allows parents to cosign and offers loans up to the cost of attendance. In addition to a 0.50% autopay discount, New Hampshire students can qualify for an additional 0.25% discount.
- Minimum credit score: 750
- Terms: 7, 10, 15 years
- Maximum loan amount: $200,000
Pro
- Offers rate discounts
Con
- Longer cosigner release compared to some other lenders (36 months)
INvestEd: Best for Indiana students
Residents of Indiana may qualify for parent student loans, and cosigning a loan is also an option if your child will attend school in the state.
- Minimum credit score: 670
- Terms: 5, 10, 15 years
- Maximum loan amount: Up to cost of attendance
Pro
- Offers up to 24 months of forbearance over the life of the loan
Con
- Only available for Indiana residents or students attending a school in the state
MEFA: Best for longer repayment terms
The Massachusetts Educational Financing Authority (MEFA) offers competitive loans and doesn’t charge origination or application fees. But the cosigner release period is longer compared to some other lenders (48 months), and the lender doesn’t offer variable-rate student loans.
- Minimum credit score: 670
- Terms: 10 or 15 years
- Maximum loan amount: Up to cost of attendance minus any financial aid received
Pro
- Ability to defer payments up to five years
Con
- Doesn’t offer any discounts for borrowers
Sallie Mae: Best for faster cosigner release
Sallie Mae offers parent loans and the ability to cosign if the student takes out the loan. The cosigner release period is shorter than many other lenders, and the lender offers both fixed- and variable-rate loans.
- Minimum credit score: Does not disclose
- Terms: 10 or 15 years
- Maximum loan amount: Up to cost of attendance
Pro
- Cosigner release available after 12 months of consecutive, on-time payments
Con
- Need a hard credit check to see what rates you qualify for
Credible makes it easy to see your prequalified student loan rates from multiple lenders.
Other lenders to consider
The following lenders aren’t Credible partners, so you won’t be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you’re looking for a parent student loan.
Rhode Island Student Loan Authority (RISLA): Best for Rhode Island students
RISLA offers both parent student loans and the ability to cosign, plus autopay discounts for all borrowers.
- Minimum credit score: Does not disclose
- Terms: 10 or 15 years
- Maximum loan amount: $45,000 per year (loan amount can’t exceed total cost of attendance)
Pro
- Doesn’t charge application or origination fees
Con
- Doesn’t offer variable-rate loans
SoFi: Best for member perks
SoFi offers both parent and cosigned student loans and an intuitive online application process. The lender also allows borrowers to pay down their loans using SoFi rewards points.
- Minimum credit score: Does not disclose
- Terms: 5, 7, 10, 15 years
- Maximum loan amount: Up to cost of attendance
Pro
- Receive member perks, such as rate discounts and ability to pay with SoFi points
Con
- Cosigner release period is lengthier compared to some lenders
Methodology
Credible evaluated private student loan lenders in 10 different categories to determine the best lenders for student loans for parents. This included interest rates, repayment options, terms, fees, discounts, customer service availability, as well as eligibility requirements and cosigner release options.
What is a federal Parent PLUS Loan?
A federal Parent PLUS Loan is a type of federal student loan available to biological or adoptive parents — and sometimes stepparents — who want to pay for their dependent undergraduate students who enroll at least half-time at an eligible college or institution. PLUS loans usually have higher interest rates compared to other types of federal student loans. Borrowers may be able to borrow up to the child’s cost of attendance after other financial aid has been taken into account.
Though there’s no minimum credit score requirement for a Parent PLUS Loan, you’ll be subject to a credit check to ensure you don’t have an adverse credit history.
Here’s an overview of PLUS loans:
- Current interest rate: 6.28% for loans disbursed between July 1, 2021, and July 1, 2022 (The rate will rise to 7.54% for the 2022-23 academic year.)
- Origination fee: 4.228% for loans disbursed between Oct. 1, 2021, and Oct. 1, 2022
- Credit check: Required
- Loan terms: 10 to 30 years
- Grace period: Six months
- Deferment period: Once child or dependent isn’t enrolled at least half-time
Can you claim a Parent PLUS Loan on taxes?
Yes, you can deduct student loan interest paid on Parent PLUS Loans on your taxes. The maximum deduction allowed each tax year is $2,500 as long as the loans are taken out in the parent’s name.
Who should take out a private student loan: The student or the parent?
Who should take out a private student loan depends on various factors, including whether the parent or student wants more responsibility.
For example, having the student apply on their own and with the parent as a cosigner might be better for the child to take on more responsibility, even if the parent will be responsible for payments the primary borrower can’t make.
Other reasons to consider this type of arrangement include:
- Parents can focus on other financial goals, like investing for retirement and paying down their mortgage, instead of worrying about making monthly loan payments.
- Student loan borrowers may qualify for more repayment options compared to parents.
- Lenders may offer more discounts for students, such as an incentive for graduating or receiving a high GPA.
- A good payment history on the loan could help the student establish a positive credit history.
Even if you take out a student loan for your child, it doesn’t mean they can’t share in the responsibility. You can come to an agreement with your child to contribute to payments, but the loan is your main responsibility.
Here are some reasons why you may want consider taking the loan out yourself:
- It may be more convenient if you intend to pay for the entire loan yourself.
- Your child won’t go into debt, so they can focus on other financial goals after graduation.
- Parents who can meet credit and income requirements may qualify for better loan rates.
How to apply for a private student loan to cover school and living expenses
Before shopping for private student loans, it’s important to explore other options first.
Fill out the FAFSA and accept federal loans. Completing the Free Application for Federal Student Aid (FAFSA) helps determine what type of financial aid a student qualifies for. Starting with federal loan options is a smart idea because you can take advantage of benefits and protections not available to private loan borrowers.
Additionally, consider applying for relevant grants and scholarships. Apply for as many as you qualify for since there isn’t a limit as to how many you can get and they don’t have to be repaid.
Here’s how you apply for a private student loan:
- Shop around for private student loans. Once you’ve determined any financial gaps after grants, scholarships, and federal loans, research different lenders to see which rates and terms are a good fit.
- Pick a loan and fill out an application form. In many cases, you can conduct a soft credit check to see what you qualify for — if you like what you see, you can proceed with the full application.
How to qualify for a private student loan
While each lender has its own qualification requirements, some common ones include:
- Good credit — Most lenders have minimum credit scores and the higher your score, the more likely you are to qualify for lower interest rates.
- Proof of income — Lenders will ask for documents, such as pay stubs or tax returns, to show that you can repay the loan. Some may even have minimum income requirements.
- Low debt-to-income (DTI) ratio — Your DTI ratio compares the amount of your gross monthly income that goes toward your debt payments. The lower your DTI ratio, the more likely you are to qualify for competitive rates.
Parent PLUS Loans vs. private parent loans
Parent PLUS Loans are different from private student loans in many respects. PLUS loans have the same interest rate and fees for all borrowers, while rates and fees for private lenders vary depending on factors such as your credit score and income.
If you’re cosigning a loan, PLUS loans don’t offer that option, while some private lenders do.
However, for both types of loans, the parent tends to be the main borrower (or has some responsibility if cosigning a private loan). They also have varying repayment terms.
Student loans for parents FAQs
Here are answers to some frequently asked questions about student loans for parents.
Does cosigning a student loan hurt your credit?
A lender will conduct a hard credit check when you apply for a loan as cosigner, which could temporarily lower your credit score by several points. But your score will typically bounce back within a few months.
Can a student take over a Parent PLUS Loan?
If you take out a Parent PLUS Loan, you’re legally responsible for the loan. You won’t be able to transfer a PLUS loan to another person, unless that person is refinancing to a private student loan. Check before you apply to see if there are lenders that allow this refinancing option.
Are both parents responsible for Parent PLUS Loans?
Only the borrower is responsible for Parent PLUS Loans. If only one parent’s name is on the loan documents, the loan is that parent’s sole responsibility. Both parents are responsible only if both names are on the loan.
Credible makes it easy to compare rates from multiple private student loan providers without affecting your credit score.