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A parent plus loan is a government loan that parents can take for all or part of their child’s college education. Approximately 3.6 million parents hold this type of loan, according to the US Department of Education. You can borrow the children’s fees to attend school and deduct any other financial aid you receive.
It is important to note that the loan costs are slightly higher than federal loans designed for students. Parents must pay the origination fee charged at 4.228% of the loan amount Federal student loan interest rates 8.94% for the 2025-26 academic year.
Federal direct plus loans (also known as parents and loans) come with fixed interest rates and federal protection, while private student loans can earn a variety of interest rates and higher fees. The right choice for you will depend on your priorities and the financial situation of your family.
Parent Plus and Private Student Loan Fees
| Key Points | Parents and loans | Private student loans for parents |
|---|---|---|
| Types of interest rates | Repaired | Fixed or variable |
| Current rate | 8.94% for the 2025-26 academic year | 3.19% – 25.96% |
| Origination fee | 4.228% | It depends on the lender, but often there is nothing |
| Credit check required | yes | yes |
| Repayment terms | 10-25 years | 5 – 25 years |
| Borrowing restrictions | Financial assistance was deducted even for attendance costs. | It depends on lenders and often deducts financial aid from attendance costs. |
| FAFSA is required | yes | no |
| Degree type | Undergraduate only (graduate and professional degree programs via direct plus loan) | It may vary by lender and may vary by school |
| Cosign options | no | yes |
| Integration and refinance | yes | yes |
| Prepaid penalty | no | It depends on the lender |
| Difficulty/Lone cancellation | Yes, both may be available | It is possible, but unusual, please contact the lender for more information |
| Major borrowers | parent | parent |
| Interest rate reduction options | .25% automatic draft monthly payment discount | yes |
| Tax benefits | Maybe up to $2,500 depending on your finances | Maybe up to $2,500 depending on your finances |
| Death and discharge | yes | Most of the time, but it depends on the lender |
| Disaster elimination | yes | Impossible, but different depending on the lender |
Parents and private loan costs
This shows a comparison table to show you what your loan looks like if you get a Parent Plus or Private Loan with an initial loan amount of $10,000 FICO scores in the “good” range.
| Key Points | More parents | Private loans (short term) | Private loans (medium term) | Private loans (long-term) |
|---|---|---|---|---|
| Repayment period | 5, 10, 25 years | 5 years | 10 years | 15 years |
| interest rate | 8.94% | 5% | 5% | 5% |
| Origination fee | $423 | It depends on the lender | It depends on the lender | It depends on the lender |
| Monthly payment | $207 | $189 | $106 | $79 |
| Total interest paid | $2,438 | $1,323 | $2,728 | $4,234 |
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How do federal parents and loans work?
- Each year, lenders set interest rates for personal loans. Congress sets interest rates for parents and loans.
- Federal loans only have fixed interest rates. Private loans come with either a fixed fee or a variable rate.
- While your child attends school, you can defer payments, but as soon as the loan is paid, interest will be accrued on the federal parents and loans.
- Parents and loans are subject to forgiveness programs and income-driven repayment plans, making monthly payments more affordable.
- Parents must reapply for loans with their parents each year.
To apply for a Parent Plus loan, follow these steps:
- Please check your qualifications: You must be a biological or adoptive parent of a dependent student who is registered at least halftime at a qualified school. In-laws are eligible in some cases, but grandparents and legal guardians do not. You need to meet too Eligibility requirements He has a strong credit history for federal student aid.
- Please fill out the FAFSA: Before you apply for a loan, your child must first fill out and submit Free application for federal student assistance (FAFSA).
- Apply for a loan: I’m heading to Direct Plus Loan Application for Parents Apply. If you are eligible, the loan will be included in your child’s financial aid package.
- Receive funds: The Ministry of Education will send funds directly to children’s schools that apply funds to tuition fees, fees, rooms, board of directors and other school-related expenses. Any remaining funds will be paid to you (or, if you allow it, the student).
- Consider your repayment options. Parents and borrowers have four types of qualifications Repayment plan – Standard repayment plans, step-by-step repayment plans, extended repayment plans, income group addiction repayment plans (if parents and loans are integrated directly into integrated loans).
How do private student loans work for parents?
- Private student loans come from private financial institutions such as banks, credit unions, and online lenders. You probably need to reapply every year.
- Parents can take the loan as a primary borrower or as a co-signer for the child. Private lenders may offer Cosigner releases after consecutive, on-time payments.
- Most private student loan lenders have a minimum credit score requirement and use this information to determine the borrower’s interest rate.
- Private loans tend to have several repayment terms ranging from five to 20 years, allowing you to borrow beyond federal lending restrictions and sometimes up to the full cost of attendance.
- Private loans do not have the opportunity to forgive the income-driven repayment plans and student loans provided by federal loans.
Three parents explain how they cover rising education costs
Three parents at different stages of schooling share how much they pay for their children’s education and the financial tools they use to do so.
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How parents decide which loan to choose
The decision between a federal plus loan and a private parent or student loan is personal, but there may be situations where one loan works better than the other.
Parent Plus Loan
Private loan
Is it better for parents or students to take away their loans?
The answer to this question depends on the unique financial situation of the parents and students. Generally speaking, students should maximize their federal student loans before seeking help from their parents.
Once students run out of federal student loans, they need to discuss with their parents about the next set of options and decide on the best path. Parents should weigh the pros and cons of getting a Parent Plus loan before applying for a private student loan by name alone or before signing a private loan with a student. It is important to note that parents are responsible for all three scenarios.
Conclusion
If you are a parent who wants to provide financial aid to the university, either a parent plus loan or a private loan can meet your needs and bridge the gap between financial aid and attendance costs. Your best bet is to compare both options based on how much it costs in the long run.
A good starting point is to check the fees and fees for your personal student loan and compare it with the fixed and expected costs of your parents and loan. If you can save money and secure a timeline for comparable monthly payments and repayments on private student loans, doing so can lead to significant savings.
