Best Parent Student Loans: How To Choose a Private or PLUS Loan

The cost of higher education continues to rise, and many students need help meeting education expenses. In the 2022-23 school year, bachelor's degree recipients graduated with an average of $29,300 in student debt, according to the College Board.

If your child's scholarships and grants aren't enough to cover their full college costs, you may consider parent student loans.

It's typically best to turn to federal student loans first since they offer low, fixed interest rates and access to special benefits, such as income-driven repayment plans. However, most federal student loans come with borrowing limits, and your child may need more funding to cover the cost of college. In that scenario, you may want to take out a loan on their behalf.

Current student loan rates

This article covers both parent PLUS and private parent loans so you can determine which is the best option for you.

What are parent student loans?

A parent student loan is a loan for which a parent is the primary borrower, and the borrower uses the funds to help pay for their child's education. You can choose from two types of parent student loans:

• Federal parent PLUS loans
• Private student loans

What is a federal parent PLUS loan?

A parent PLUS loan is a type of federal student loan available to parents who want to help pay for their child's education expenses. PLUS loans have higher interest rates in comparison to other federal loans.

Unlike other federal loans that come with lower student loan limits, you can borrow up to your child's school-certified cost of attendance (minus any other financial aid they've received) with a PLUS loan.

Here are several important points to note if you're considering a parent PLUS loan:

8 of the best parent student loans

Parent borrowers have a few options to help pay for their child's college education, including both federal and private student loans. For private student loans, you can take out a parent student loan or cosign a loan taken out by your child.

However, depending on your credit, you might get a lower interest rate on a private student loan compared to a federal parent PLUS loan. Just remember that a private loan won't offer the same benefits as a PLUS loan.

If you decide to take out a private student loan, it's important to consider as many lenders as you can to find a loan that suits the needs of both you and your child. Here are Credible's partner lenders that offer private student loans to parents — either directly or through cosigning:

Ascent

Through Ascent, parents can borrow a loan directly or cosign a loan taken out by an undergraduate student. With an Ascent cosigned loan, your child can borrow between $2,001 and $200,000 (aggregate limit) unless they live in Massachusetts, where the loan minimum is $6,0001. Parents can borrow up to the school-certified cost of attendance.

Potential discounts include a 0.25% autopay discount and a 1% cashback graduation reward.

Citizens

Citizens offers undergraduate student loans (that parents can cosign) from $1,000 to $225,000 with five-, 10- or 15-year terms. You also have the option to take out a parent student loan with either a five- or 10-year term.

If you already have an account with Citizens, you might qualify for a loyalty discount of 0.25 percentage points — and you could get another discount of 0.25 percentage points by signing up for automatic payments.

College Ave

College Ave offers student loans from $1,000 up to your child's school-certified cost of attendance (minus other financial aid your child has received). Parents can borrow the same amount through a parent student loan.

The lender offers both fixed and variable rates, as well as up to four different repayment plans (depending on the loan type).

INvestEd

If you live in Indiana, you might qualify for a parent student loan from INvestEd. You also have the option to cosign a student loan from INvestEd if your child lives in or attends school in Indiana.

INvestEd loans range from $1,001 up to 100% of your child's cost of attendance (minus any other aid they've received) if the school is in Indiana. For Indiana residents who attend college in a different state, the minimum loan amount is $2,001.

SoFi

With SoFi, you can take out a parent loan directly or cosign your child's loan. SoFi shines when it comes to borrower perks, as it offers unique benefits like free financial planning advice, networking events, and referral bonuses. Plus, SoFi doesn't charge any fees — even late or insufficient funds fees.

Nelnet Bank

Nelnet Bank offers competitive interest rates on both parent loans and cosigned student loans. The lender doesn't charge an origination fee and offers a discount when you enroll in autopay. If you do cosign your child's loan, you can be removed later through cosigner release, and your child has a choice between multiple repayment plans.

Sallie Mae

Sallie Mae allows you to cosign a loan for your child, and it offers a relatively short time frame for cosigner release at just 12 months. The cosigned loan comes with a choice between interest-only, fixed, or deferred payments, and there's no origination fee.

ELFI

With ELFI, you can take out either a fixed or variable parent loan starting at $1,000. The lender offers flexible repayment plans, and parents can also choose to cosign their child's loan. One unique benefit of taking out a loan with ELFI is that each customer is paired with a student loan adviser who can help every step of the way with the application process.

Why you can trust our Credible experts

The Credible editorial team is independent and unbiased. Partners do not influence our editorial content. To help you find the best student loan for your situation, we conduct thorough research and analyze thousands of lender data points. Using data-driven methodologies, we score criteria that are important to you. This allows us to objectively rank student loan lenders and products. To learn more, read our methodology below.

Methodology

To determine the best parent student loan lenders, Credible collected more than 1,000 points of data on two dozen companies and evaluated them on several different categories: repayment options, eligibility, interest rates, loan terms, and customer support. Based on our findings, we assigned a score out of five stars to each lender. Below are the weightings assigned to the general categories for the best student loan companies — which comprise individual criteria that are also weighted.

• Repayment options: 30%
• Eligibility: 25%
• Interest rates: 20%
• Loan terms: 15%
• Customer support: 10%

While the best lender for you will depend on your unique needs and financial circumstances, these findings should help answer your questions and assist you in your search for the best student loan.

Learn more about our methodology.

Parent PLUS loans vs. private parent loans vs. cosigned loans

Here are a few factors to keep in mind while comparing parent PLUS loans, private parent loans, and cosigned loans.

You can apply for a parent PLUS loan on the StudentAid.gov website. Before you apply, make sure your child has already completed the Free Application for Federal Student Aid (FAFSA). For private parent loans, you can apply online with the lender you choose.

No matter which type of student loan you choose, it's important to consider how much that loan will cost you in the future. This way, you can prepare for any added expenses. You can find out how much you'll owe over the life of your federal or private student loans using Credible's student loan calculator.

Should a parent or a student take out a private student loan?

“Before making the decision to take out a private student loan of any kind, the parent should first make sure they don't need access to any federal student loan programs available to parent PLUS loans, such as Public Service Loan Forgiveness (PSLF), income-driven repayment plans, or disability discharge if the parent is at risk of being permanently disabled,” says Ryan Galiotto, a certified student loan professional (CSLP) and founder of Student Loans Gotta Go.

“If you decide to take out a private student loan, you'll want to consider the financial responsibility of the child. If you cosign and the child stops making payments, this could have an adverse impact on [your] credit score. In that case, it may make sense for the parent to own the debt entirely,” he adds.

“However, if they feel the child will maintain the payments, it might be wise to then be a cosigner to help the child qualify for the best lending terms. If the parent is cosigning, check with the lender about any cosigner release programs they offer. Some lenders will release a cosigner after two to four years of on-time payments by the child.”

Here's an overview of the reasons why a parent student loan could be a better option:

• The student isn’t responsible for payments: If the parent plans on paying the entire loan balance, a parent loan could be more convenient. You can work directly with the lender to choose a repayment plan that suits your needs.
• The student avoids debt: Taking out a parent loan could help prevent the student from going into debt as well as help them focus on other goals.
• Parents might qualify for better rates: Parents are generally able to meet credit and income requirements more easily than students. This could help you qualify for a good interest rate.

Here are a few advantages for a student to take out a loan with a parent cosigner:

• The student might qualify for more discounts: Some lenders provide exclusive rate discounts to students. For example, Ascent offers a 1% cash-back graduation reward.
• The student is responsible for loan payments: Because the student is responsible for making monthly loan payments, parents can focus on saving for retirement and other financial priorities. However, remember that if your child can’t keep up with payments, the cosigner will be on the hook.
• More repayment options available to student borrowers: Student borrowers sometimes have more repayment options, such as longer repayment terms or deferred payments while in school.

How to qualify for a private student loan

Eligibility criteria for private student loans vary by lender. But there are a few common requirements you’ll likely come across, including:

• Good credit: You’ll typically need good-to-excellent credit to qualify for a private student loan. Having good credit could also help you secure a better interest rate. While some lenders offer student loans for bad credit, these typically come with higher interest rates compared to good-credit loans.
• Verifiable income: Lenders want to see that you’ll be able to repay the loan. Some lenders have specific minimum income requirements while others don’t — but in either case, the lender will generally ask to see proof of income.
• Low debt-to-income ratio: Your debt-to-income ratio (DTI) is the amount of debt you owe compared to your income. You’ll generally need a DTI lower than 50% — though some lenders might require lower percentages.

How to apply for a private student loan to cover school and living expenses

If you’re ready to apply for a private student loan, follow these four steps:

1. Complete the FAFSA: Your first step should be filling out the Free Application for Federal Student Aid (FAFSA). The school will use the student’s FAFSA results to determine what federal student loans and other federal financial aid they qualify for.
2. Apply for grants and scholarships: Unlike student loans, grants and scholarships don’t have to be repaid — which essentially makes them free money for school. There’s no limit on how many college grants and scholarships you can get, so it’s a good idea for students to apply for as many as they possibly can.
3. Accept federal student loans: If you need to borrow for school, it’s usually a good idea to start with federal student loans so you’ll have access to federal benefits and protections. There are several types of federal student loans that students might qualify for. Additionally, parents can apply for parent PLUS loans to fund their child’s education.
4. Use private student loans to fill any gaps: After exhausting grant, scholarship, and federal student loan options, private student loans could fill any financial gaps left over. For example, private student loans could help cover education costs like tuition, textbooks, or living expenses.

If you decide to take out a private student loan, be sure to consider as many lenders as possible to find the right loan for you — whether it’s a parent loan or a cosigned loan. This is easy with Credible. You can compare your prequalified rates from multiple lenders in two minutes.

How to get the best parent student loan rate

Congress sets federal student loan rates each year. For the 2024-25 academic year, parent PLUS loans have an interest rate of 9.08%.

On the other hand, individual lenders set private student loan rates based on market conditions. Also, keep in mind that other factors will affect the actual rates you're offered, such as your credit score and the repayment term you choose.

A couple of strategies might help you qualify for a better rate on a private loan, including:

• Apply with a cosigner: If you have poor or fair credit, applying with a cosigner with good credit could improve your chances of getting approved. Even if you don't need a cosigner to qualify, having one might get you a lower rate than you'd get on your own.
• Compare lenders: Shopping around and comparing your options with as many lenders as possible can help you find a loan with the most optimal rate for your needs.