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Compare Parent Loans for College: PLUS and Private

Nov. 8, 2018
Loans, Student Loans
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We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

Parent student loans are available to mothers and fathers who want to help put their kids through college. There are generally two types: Federal parent PLUS loans and private parent loans.

As much as you love your child, don’t take on debt for them unless you’re in a strong financial position yourself. Before taking out parent student loans, make sure that:

  • Your child has maxed out federal student loan options
  • You’re saving enough for retirement
  • You’ve paid off high-interest debt, like credit cards

If you decide to move forward with a parent loan, make sure you and your child work out clear plans for repayment. The loan will ultimately be your responsibility to repay. The only way to transfer parent loans is to have your child refinance the loan in his or her name.

Federal parent PLUS loans

Federal direct PLUS loans are government loans that parents can take out to help pay for a child’s college education. They have higher interest rates and fees and qualify for fewer repayment plans than federal direct subsidized and unsubsidized loans for students.

» MORE: Estimate monthly payments using a parent PLUS loan calculator

Assuming your child has exhausted federal student loan options and your finances are sound, consider a parent PLUS loan if:

  • You work for the government or a 501(c)(3) nonprofit and want to pursue Public Service Loan Forgiveness
  • Your credit isn’t strong enough to qualify for a lower rate with a private parent loan

To apply for a PLUS loan, fill out the Free Application for Federal Student Aid with your child. NerdWallet’s FAFSA guide can help. Then, complete the direct PLUS loan application for parents.

» MORE: Are you eligible for a parent PLUS loan?

Parent PLUS loan interest rates

Academic yearPLUS loan interest ratePLUS loan fee
2018-197.60%4.26%
2017-187.00%4.26%
2016-176.31%4.28%
2015-166.84%4.27%
2014-157.21%4.29%

Interest rates for federal direct PLUS loans are fixed and set by Congress each year; they’re 7.60% for 2018-19. There is also a substantial loan fee of 4.26%, which is deducted proportionally from each loan disbursement. If your finances and credit are solid, you may find private parent student loans a better deal.

» MORE: Current student loan interest rates: federal, private, refinancing

Private parent student loans

Private parent loans are private student loans offered by banks and online lenders. They generally don’t come with fees, unlike federal parent PLUS loans.

» MORE: Your parent PLUS loan was denied: Now what?

A private parent loan may be a better option than a federal parent PLUS loan if:

  • You don’t plan to pursue Public Service Loan Forgiveness
  • You have good enough credit to get a better rate than the PLUS loan rate while taking the PLUS loan fee into account

Before applying for a private parent loan, shop around to find the lowest student loan interest rate you qualify for. Some lenders have a pre-qualification process that allows you to see a personalized rate before the lender does a hard credit pull.

PLUS loans vs. private parent loans

LenderRepayment optionsGet started

5.0 stars out of 5
NerdWallet rating: 5.0 / 5.0
Repayment begins immediately. Income-based repayment is available.

RISLA review

4.5 stars out of 5
NerdWallet rating: 4.5 / 5.0
Make interest-only payments while your child is in school, or begin making full monthly payments immediately.

College Ave review

Federal PLUS loan4.5 stars out of 5
NerdWallet rating: 4.5 / 5.0
Full monthly payments generally begin immediately. You may defer loan payments while your child is in school.

Federal PLUS loan review

4.5 stars out of 5
NerdWallet rating: 4.5 / 5.0
Make interest-only payments for 48 months or begin making full monthly payments immediately.

Sallie Mae review

4.5 stars out of 5
NerdWallet rating: 4.5 / 5.0
Make interest-only payments for 48 months or begin making full monthly payments immediately.

Wells Fargo review

4.0 stars out of 5
NerdWallet rating: 4.0 / 5.0
Make interest-only payments while your child is in school, or begin making full monthly payments immediately.

Citizens One review

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