Best Student Loans for Parents

Student Loans for Parents are the loans which a parent takes, to help their kid with college debt. Learn more about parent PLUS loans, private parent loan lenders, how to receive student loans, private student loan options for parents and more.

Updated by Priya shah on 5th September 2020

The demand for Parent student loans is increasing rapidly as per recent studies related to student loans. It helps to relieve the debt of the student and after they graduate from college to start on the right foot financially.

Parents of a dependent student can take the loans to provide financial aid packages and help them pay for college/schools. The student loans for parents can be categorized into two: Federal and Private student loans. In this article, we provide an overview of all available loans, a parent can take to help their children.

Table of contents

What is a Parent PLUS loan?

The Parent PLUS loan is the federal direct student loan -- that is available for parents of dependent undergraduate students. The Parent PLUS interest rates are fixed rates (7.08%) and also have flexible loan limits. To qualify the eligibility criteria:

  • The parent must have a strong credit history

  • Just make sure they don't have an adverse credit history

Parent PLUS loans have a 4.236% origination fee for the first loan disbursed. Before enrolling any borrower for the parent PLUS loan program, the student must exhaust eligibility for the loan to get the best loans. They have a lower interest rate and fees. Most of the parents also borrow this parent PLUS loan program to reduce the burden of the child and they don’t take on too much student loan debt.

Federal loan Rate of interest
Parent PLUS loan 7.08%

Note: Borrowing the direct loan before parent PLUS loans will no doubt save money for the future of the student. The parents of independent undergraduates are not eligible for the Parent PLUS loan. Parent PLUS loans can also be called the financial responsibility of the parents.

Application process

  • The ones who are applying for a PLUS loan must submit the FAFSA form and also sign a master promissory note

  • FSA ID is required to request the loan. Contact the financial aid office at the student college or university for more queries and detailed info. 

  • Students must enroll in school for at least a half-time basis

  • Students complete financial aid history must be checked before getting into any agreement of parent PLUS loan

  • The parent cannot owe an overpayment on a federal education grant neither be in default on previous loans

Eligibility criteria

Student loans for parents are the type of loan, -- that a parent can avail for their kid, to pay for college education and other relevant expenses. But they typically come with a short term period and a higher rate of interest compared to other student loans. You may also not be eligible for a grace period and other options like deferment and forbearance. To qualify for this loan :

  • You must be a U.S. citizen or have a permanent resident.

  • Also must be a parent or legal guardian of the student at a renowned university.

  • And meet the credit requirements.

  • The borrower must not subject to default within the past five years of a bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off

  • And most importantly federal parent loans are available only to biological or adoptive parents

The loan is categorized into federal and private student loan where parent PLUS loan comes under the federal student loan category. 

Worried about your college tuition? Find the best student loans for you 

Private parent loan lenders

If you do not qualify for Parent PLUS loan (a federal loan) and wish to help your kid with his/her education? You still have options to explore. Private lenders offer private parent loans to ease the process. Below is a list of private lenders you can consider: 

Private lender Fixed interest rate
Wells Fargo Parent Loan 4.99% -10.72%
Citizens Bank student loan 4.25%-11.95%
ELFI 3.19% - 5.99%
Sofi 4.11% - 11.83%
Risla 3.64 - 5.46%

List of other lenders who provide private parent loans: 

College Ave parent loan

College Ave is an online lender who offers loans to parents, so they can cover the full cost of their child’s education. It offers various choices between paying interest while you are in school, getting lower interest rates, and principal repayments. The loan term is 5 to 15 years. You can prequalify online and maintain the offer for between 60 to 90 days. The online process is simple and takes few minutes to fill the application form. 

  • The interest rate starts from 5 - 6% -  fixed or variable

  • They don’t charge origination fees

  • The repayment term exceeds 10 years

Sallie Mae parent loan

Sallie Mae is another online private lender that helps get a loan. It was started in 1973 as a government-backed student loan program, but today they are private online lenders. The interest rates are comparatively higher than parent PLUS loans. To apply for a loan in Sallie Mae, you don’t have to be a parent or guardian but you can be a family member, sibling, or a family friend. 

The process of applying for a loan at Sallie Mae’s is simple and takes 15 minutes to complete the application on its site. After the approval, the school receives the loan. You have the option of choosing - to make full payments or pay towards the interest.

  • The interest rate starts from 5 - 6% -  fixed or variable

  • They don’t charge origination fees

  • The repayment term exceeds up to 10 years

Citizens Bank student loan for parents

Citizens Bank student loans for parents are unlike other loan lenders. Citizen bank has limits to how much the loan amount can be borrowed to pay for the child’s education and is also based on the degree. Likewise, you can apply online for the citizen’s bank student loan. But the application process can be slightly complicated compared to others. As they ask for the extensive documentation, that may include a recent pay stub and not more than 30 days old. They would also require proof of income and monthly housing costs.

You can choose between interest - only and full repayments. 

The advantage is the interest rate discounts offered. Like deduction of 0.25% rate of interest on autopay and another 0.25% discount for those who already have an account with citizens bank.

  • The interest rate starts from 7% of the fixed rate 

  • They don’t charge origination fees

  • The repayment term exceeds 5  to 10 years

Choosing the right Parent loan - Parent PLUS loan vs. private student loan

Parent PLUS loans are funded by the government. Parent PLUS loan offers various protections for the borrower and several repayment options when compared to private student loans especially to the parents. Parent PLUS loans have flat interest rates of 7.08% PLUS also an origination fee of 4.236%. 

Private student loans can be applied through a bank, credit union, or online lenders. The interest rate on a private student loan depends on your cosigner credit. Beyond a 690 credit score, you are likely to pay a higher rate of interest than federal student loans. 

General information

Below is the list of questions mentioned that might arise while you check for Parent student loans. It is necessary to have complete information before applying for any type of loan. 

How will I receive my parent PLUS loan?

After the approval of the loan, the school will apply parent PLUS loan funds to the student’s school account for the payment of tuition, fees, or other related expenses and charges. After the clearance of these expenses if any amount is excess they will return the amount to the student by parent authorization. That will help the student to pay other education-related expenses for the study they are pursuing.

What if I have trouble repaying my loan?

Nothing can be done once you default your student loan but many steps can be taken to avoid the same. If you are unable to make your scheduled payments, you can contact your loan servicer as soon as possible. Your servicer may suggest and help you deal with the various options for keeping your student loan in a sound state. You have various options for lowering the monthly payments (refinancing and consolidation) or even can request a deferment or forbearance that can pause your payment for a certain period.

Do I need a cosigner for a private - parent student loan?

A cosigner is required when you individually fail to qualify for the loan, and when you don’t have an income either a good credit score or no credit. Then you may require a cosigner to get private student loans. 

Your cosigner must have a steady income and an excellent credit score. Signing with a cosigner means they are bound to pay the loan bill if you can’t pay them off. The co signer's credit history can also be affected if you fail to make on-time payments towards your student loans. The lenders also look at the school you are graduating in and the income and career potential to determine the amount you can borrow depending on the rates.

The cosigner debt-to-income ratio will be also checked by the lender to make sure that you have enough funds to pay student loan expenses.