Paying for college can be a challenge, and if your child needs financial help, you might consider taking out a student loan in your name. Parent student loans can help cover education costs when savings and income aren't enough.
The best parent option depends on your financial situation. Federal parent PLUS loans offer flexible repayment plans and forgiveness options. They can be a good choice if you need more borrowing flexibility. On the other hand, private parent loans may offer lower interest rates if you have strong credit and a high income.
The best private parent student loan is College Ave due to its competitive rates for parents and flexible terms. However, here's what to consider when comparing your options.
Current student loan rates
Types of student loans for parents
Parents have two main loan options to help their children pay for college:
- Federal parent PLUS loans: The U.S. Department of Education offers parent PLUS loans for biological, adoptive, and in some cases, stepparents of dependent undergraduate students. To qualify for these loans, you must not have an adverse credit history.
- Private parent loans: Banks, credit unions, and online lenders offer student loans for parents to help cover their child's education costs. Eligibility requirements vary by lender, but a good credit score and stable income are usually required.
“I strongly recommend that parents first ensure they've determined the maximum amount their child qualifies for in federal subsidized and unsubsidized loans before considering taking out private student loans on their behalf. These loans usually have lower interest rates and more repayment options, making them the better choice.”
— Richard Richtmyer, Senior Student Loans Editor, Credible
Compare federal vs. private parent loans
| Federal parent PLUS loans | |
|---|
| U.S. Department of Education | Banks, credit unions, and online lenders |
| | Varies by lender; fixed or variable |
| | Most lenders don’t charge origination fees |
| As much as the full cost of attendance at your child’s school | As much as the full cost of attendance at your child’s school |
| Must not have adverse credit | A minimum FICO score of 670 is usually required |
| 10 to 25 years, depending on the plan | |
Eligible for forgiveness programs? | | |
Best private parent student loans
Best for Extended Grace Periods
Min. Credit Score
Does not disclose
Variable APR
4.44 - 17.99%
Loan Amount
$1,000 up to 100% of the school-certified cost of attendance
Term
5, 8, 10, 15 (20 for health professionals)
Rate discount of one-quarter of a percentage point for using autopay
Does not charge origination or application fees
May qualify for multiyear approval
Grace periods between 9 and 36 months for graduate, MBA, law, dental, and medical school loans and 36 months
Parents borrowers are required to pay at least the interest while the student is in school
Cosigners not eligible for release until at least half the repayment term of the loan is completed
Overview
College Ave offers student loans for almost every type of degree program, with a range of repayment options, including a unique eight-year repayment term. Additionally, you can get extended grace periods of as long as 36 months on graduate, dental, and medical student loans.
It's also possible to get loan approval for multiple school years at one time. About 90% of undergraduates applying with a cosigner are approved for additional student loans. However, you must complete at least half of your repayment term before you can remove a cosigner for your loan. Some lenders allow cosigners to be released much sooner, after as few as one to two years of payments.
Loan terms
5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)
Loan amounts
$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile
Cosigner release
Available after more than half of the scheduled repayment period has elapsed and other requirements are met
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Best for No-Cosigner Loans
Min. Credit Score
Does not disclose
Variable APR
5.01 - 14.67%
Loan Amount
$2,001 to $400,000
Doesn’t charge application fees or origination fees
Offers discounts of 0.25 to 1 percentage points when using automatic payment
Can get a 1% cash-back reward after you graduate
Grace periods from 9 to 36 months
May find lower interest rates with some competitors
International students don’t have option to release cosigners
Overview
While Ascent provides traditional student loans for undergraduate, graduate, and medical programs, it also stands out with some options that are uncommon among private student loan lenders. For example, its Outcomes-Based Loan, which doesn't require established credit or a cosigner, is available to juniors and seniors. When assessing your application, Ascent considers factors including your school, major, and GPA to determine if you're eligible.
Ascent also offers its Progressive Repayment plan to qualified borrowers. It allows you to begin with smaller payments at the start of the repayment term and then gradually pay more each month over time. If you borrow with a cosigner, they can be released after you make as few as 12 monthly payments. However, cosigners on loans for international students do not qualify.
Loan terms
5, 7, 10, 12, 15, or 20 years
Loan amounts
$2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates
Eligibility
Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Best for flexible repayment
Variable APR
5.00 - 13.97%
Loan Amount
$1,000 up to cost of attendance
Receive support from a dedicated Student Loan Advisor
Transparent credit and income requirements
Doesn't require full-time enrollment
Flexible repayment terms
Must be enrolled in a bachelor’s degree program or higher
Cosigners can’t be released from the loan
No autopay rate discounts available
Overview
ELFI a division of Tennessee-based SouthEast Bank, offers private student loans and refinancing for undergraduates, graduates, and parents. Borrowers can take out loans starting at $1,000, with options up to the full cost of attendance at their school.
ELFI student loans are available to students nationwide who are enrolled in a bachelor's degree program or higher. Borrowers can choose from multiple repayment terms and benefit from competitive interest rates and support from a dedicated Student Loan Advisor. However, ELFI doesn't offer cosigner release or rate discounts, which may limit flexibility for some borrowers.
Loan amounts
$1,000 - Cost of attendance
Cosigner release
A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.
Eligibility
All 50 states as well as Washington DC and Puerto Rico.
Min. Credit Score
Does not disclose
Loan Amount
$1,000 to $100,000
Top customer service ratings
Valuable member benefits
No fees policy
No disclosed credit or income requirements
Shorter repayment terms than some lenders
Cosigner release requires 2 years of on-time payments
Overview
SoFi offers fixed- and variable-rate student loans to help undergraduate, graduate, and professional students and parents of students finance their education. These loans can cover up to the total cost of attendance, with a minimum loan of $1,000. Students must be enrolled at least half-time in a degree-seeking or graduate-certificate program at an eligible school and a U.S. citizen, permanent resident, or non-permanent resident alien.
SoFi has multiple repayment plans, allowing students to pick terms that best fit their financial situations, with cosigner release after 24 months of consecutive on time payments. Cosigners in Colorado, Connecticut, and Maine are eligible for release after 12 months. Borrowers can choose between fixed and variable rates, with the option to reduce rates by 0.25% when enrolling in automatic payments. They can also qualify for a 0.125% interest rate discount on subsequent loans with SoFi's Continuing Scholar Discount. Plus, a $250 cash bonus with a 3.0 GPA or higher for full-year loans or $100 cash back for single-semester loans.
Loan amounts
$1,000 minimum up to your school’s annual cost of attendance
Eligibility
Must be a U.S. citizen or DACA student enrolled at least half-time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may be eligible with a cosigner.
Best for Multi-Year Approval
Variable APR
4.97 - 15.59%
Loan Amount
$1,000 to $350,000 (depending on degree)
Multiyear approval lets you secure funding for future school years
You can reduce your rate by 0.5 percentage points with autopay and loyalty discounts
International students can apply with a qualified cosigner
Fewer repayment terms to choose from than some other lenders
Long wait time for cosigner release
Parents can’t defer payments while student is in school
Overview
Citizens Bank offers private student loans for undergraduate and graduate students, as well as parents. With its multiyear approval option, you can apply for a loan once, and as long as you qualify, you won't need to reapply each year. This means you can secure loans for future academic years without multiple hard credit checks.
Citizens borrowers can also take advantage of interest rate discounts. If you or your cosigner has an account with Citizens Bank, you can reduce your rate by 0.25 percentage points. Another 0.25 percentage points can be shaved off by enrolling in automatic payments, giving you the chance to lower your rate by up to 0.5 percentage points.
Loan terms
5, 10, or 15 years for student loans; 5 or 10 years for parent loans
Loan amounts
$1,000 minimum, up to a maximum of $225,000 for undergraduate and graduate degrees; $300,000 for MBA and law; and $225,000 or $400,000 for health care student loans, depending on the degree type
Eligibility
Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.
Best for Indiana Students
Variable APR
7.15 - 11.20%
Loan Amount
$1,001 up to 100% of school certified cost of attendance
Low minimum borrowing limits
Autopay discount of 0.25 percentage points
Short cosigner release requirements
Transparent qualification requirements
Loans are available only to Indiana residents
No prequalification option to view your rates
No loan options for international students
Overview
INvested is an Indiana company that offers affordable student loans exclusively to state residents. Loans are available to Indiana students and parents who can meet income and credit requirements, or who have an eligible cosigner. Borrowers can borrow as little as $1,001 or as much as the school-certified cost of attendance minus other aid.
INvested provides detailed information on eligibility so borrowers can quickly determine whether to apply for a loan — however, there’s no option to prequalify with a soft credit check. Cosigner release is also available after just 12 on-time payments, considerably shorter than many other lenders.
Loan amounts
$1,001 minimum, up to the school certified cost of attendance
Eligibility
Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.
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 student loan lenders for parents, 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. We assigned a score out of five stars to each lender based on our findings. 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.
How to compare parent loan options
When choosing a parent student loan, consider these key factors:
- Interest rates: Check whether the loan has a fixed or variable rate. For private loans, review the rate range based on your credit and see if you can prequalify to estimate your rate. Your interest rate will significantly impact the total cost of the loan.
- Fees: Look for application, origination, or other fees that could add to the cost of borrowing. Many private lenders don't charge origination fees, while federal parent PLUS loans do.
- Repayment terms: The repayment term affects both your monthly payment and total interest costs. Federal loans offer terms from 10 to 25 years, while private lenders may have terms as short as 5 years.
- Student loan forgiveness: Federal parent PLUS loans can be eligible for forgiveness under the Income-Contingent Repayment (ICR) Plan after consolidating into a Direct Consolidation Loan. Public Service Loan Forgiveness (PSLF) may also be an option for parents working in the public sector. Private loans don't typically offer forgiveness.
- Borrower benefits: Some lenders offer perks like autopay discounts or temporary payment relief. Compare these benefits to see if they add value.
Pros and cons of federal parent PLUS loans
Pros
- No credit score requirement
- Forgiveness options available
- Can borrow as much as the full cost of attendance
Cons
- Adverse credit check required
- Higher interest rate than other federal student loans
- Forgiveness not available to all parents
Parent PLUS loans let you borrow up to the full cost of attendance, minus any other financial aid your child receives. They also come with federal benefits, including the option to defer payments while your child is in school and for six months after graduation. Plus, parents who work in the public sector may qualify for Public Service Loan Forgiveness. And parents with low income can become eligible for the Income-Contingent Repayment (ICR) Plan, which sets payments at 20% of your income and forgives the remaining balance after 25 years.
See Also: How To Apply for a Parent PLUS Loan
However, parent PLUS loans have higher interest rates than other federal student loans, which can make them more expensive in the long run. To qualify, you must also pass an adverse credit check, meaning you can't have certain negative marks on your credit report, such as a loan default, bankruptcy, foreclosure, repossession, wage garnishment, or tax lien in the last five years.
Pros and cons of private parent loans
Pros
- Lower rates for parents with excellent credit
- Can borrow as much as the full cost of attendance
Cons
- Stricter eligibility requirements than federal loans
- Less flexible repayment terms
- No forgiveness options
Private parent loans can be a good option if you have excellent credit since you may qualify for a lower interest rate than a federal parent PLUS loan. These loans also let you cover as much as the full cost of attendance at your child's school, minus other financial aid they receive.
However, private parent loans come with fewer borrower protections and benefits. Unlike federal loans, private parent loans don't offer income-driven repayment or forgiveness programs. They can also be harder to qualify for, as lenders set their own eligibility criteria based on your credit score, income, and debt-to-income ratio.
What credit score do I need for a parent student loan?
Your credit score plays a key role in determining the interest rate you qualify for on a private parent loan. The chart below shows the average rates for borrowers with different credit scores who used the Credible marketplace to find a lender.
Comparing these rates to the 9.08% interest rate on federal parent PLUS loans can help you decide whether a private loan is the more affordable option based on your credit profile.
See Also: Student Loan Options for Parents With Bad Credit
Alternatives to parent student loans
Before borrowing a parent student loan, consider whether it fits your financial goals, especially if it could impact your ability to save for retirement.
Ideally, your child should explore other funding options first, including grants, scholarships, and federal student loans, which offer more repayment flexibility and forgiveness programs.
Here are some alternative funding sources to consider:
- Have your child take out federal student loans: Your child can take out federal student loans by submitting the Free Application for Federal Student Aid (FAFSA). As a student borrower, they'll have access to more repayment plans.
- Be a cosigner: You can cosign a private student loan for your child to help them get approved, but the loan is in their name.
- Help with loan payments: If you want to help pay for your child's education, you can agree to help them make their student loan payments. That way, the student loans will be in your child's name and not your legal responsibility, but you can still offer financial support.
- Choose a more affordable college: Some universities are more costly than others. If the cost of attendance is pushing you toward parent student loans, consider a more affordable college, such as an in-state public university, community college, or online college.
FAQ
What is the best student loan option for parents?
Open
The best student loan option for parents depends on your financial situation. If you have a low income or a less-than-ideal credit score, a parent PLUS loan may be the better option since it has a fixed interest rate that isn't based on your financial credentials. If you have a strong credit score and stable income, a private parent loan may offer a lower interest rate.
What is the best way for parents to pay for college?
Open
The best way for parents to pay for college is to use savings, income, or a 529 plan before turning to loans. If borrowing is necessary, parents can choose between federal parent PLUS loans from the U.S. Department of Education and private parent loans from banks, credit unions, and online lenders.
Is the parent PLUS loan a good idea?
Open
A parent PLUS loan can be a good idea if your child has already maxed out their federal student loans and you need additional funding. However, if you have strong credit, a private parent loan may be a better option since it could offer a lower interest rate than a PLUS loan.
Can a parent PLUS loan be transferred to the student?
Open
Parent PLUS loans cannot be transferred to your child. As the borrower, you are solely responsible for repayment. However, your child may be able to refinance the loan in their name through a private lender. Keep in mind that refinancing a federal loan means losing access to federal benefits and protections.
Meet the expert:
Renee Fleck
Renee Fleck is a student loans editor with over six years of experience. Her work has been featured in Fast Company, Morning Brew, and Sidebar.io, among other online publications. She is fluent in Spanish and French and enjoys traveling to new places.
