Sending a child off to college can be an exciting and rewarding time for parents. But thinking through how to pay for your child’s college education can be stressful.
Student aid that doesn’t need to be paid back, like scholarships and grants, is a great place to start. But if student loans are necessary, some parents might consider taking out a loan under their name.
Taking out a loan to help your child pay for college is generous, but make sure that your own finances are in order. At the very least, have an emergency fund in place for yourself and keep your retirement savings on track.
If you still feel secure about your decision to take out a loan, compare all of your options for parent student loans, carefully evaluating rates, terms and benefits. Below are the best student loans for parents this year.
7 best student loans for parents
For most undergraduates, the most affordable financing available is a federal loan taken out in the student’s name. Direct Subsidized and Unsubsidized student loans offer the lowest interest rates and most generous benefits of all federal loans. See how the federal loans compare.
However, if your child has already hit their annual or lifetime federal borrowing limits, they might need help bridging the funding gap. Also, some parents simply feel strongly about helping their child graduate without loads of student debt weighing them down.
Here are some of our favorite parent student loans.
1. Parent PLUS loans
Unlike other types of federal Direct loans, Parent PLUS loans don’t have fixed annual and lifetime borrowing limits. Instead, loan awards can cover the full cost of attendance for an undergraduate (parents of graduate students are ineligible).
These loans come with fixed interest rates, and repayment can be deferred until the student graduates or drops below half-time enrollment. Currently, Parent PLUS loans come with an interest rate of 5.30% and a one-time loan disbursement fee of 4.236%.
You must agree to a credit check when applying for a Parent PLUS loan. And borrowers with an adverse credit history are ineligible without a creditworthy cosigner or providing documentation of extenuating circumstances.
Learn how the Department of Education defines an adverse credit history.
Parent PLUS borrowers can also qualify for Income-Driven Repayment (Income-Contingent Repayment plan only) and Public Service Loan Forgiveness (PSLF) by consolidating the loans with a Direct Consolidation Loan.
2. Sallie Mae Parent Loan
Sallie Mae’s Parent Loans are private loans that can cover up to the full cost of attendance for a student. They come with 10-year terms, fixed or variable interest rates, and a 0.25% autopay rate discount.
There are no application or origination fees. And borrowers can make interest-only payments while the student is enrolled in school for up to 48 months.
You don’t have to be a parent to take out one of these loans. Any creditworthy adult is eligible to apply. And you might even qualify for financing if your student’s enrollment status is below half-time.
Sallie Mae Parent Loan borrowers also get four free months of Chegg and a free FICO® Score, every quarter. And once you’ve been approved for one Sallie Mae Parent Loan, it could make it easier to qualify for financing in the future. Returning customers enjoy an approval rate of over 90%.
Read our full review of the Sallie Mae Parent Loan.
3. College Ave Parent Loan
Like the other private lenders on this list, College Ave’s Parent Loans cover up to the full cost of attendance, come with fixed or variable rates (with an available 0.25% autopay discount), and there are no fees to apply.
But College Ave separates from the pack by offering a lot of payment flexibility. Parents can choose from 11 different repayment terms, from five to 15 years. And it offers three different payment options while the student is in school: interest-only, interest plus, or full principal and interest payments.
Also, up to $2,500 of the loan can be sent straight to you. That way you have more control over how the money is spent on non-tuition education expenses (like textbooks and equipment).
4. Citizens Bank Parent Loan
One of the unique features of the Citizens Bank Parent Loans is the potential to receive multiyear approval. If you qualify for this benefit, you could immediately know how much you’re eligible to borrow in each academic year after filling out just one application.
These loans come with five- or 10-year terms and interest-only payments are allowed while the student is in school. Also, up to 0.50% in discounts available to borrowers who qualify for both the 0.25% loyalty discount 0.25% autopayment discount
Like most private student loans, these loans can cover up to the full cost of a student’s attendance. However, there is a lifetime borrowing maximum of $150,000 for undergraduates and $350,000 for some graduate students, depending on the area of study.
5. Education Loan Finance Parent Loan
The parent loans offered by Education Loan Finance (ELFI) come with five, seven, or 10-year terms, with fixed and variable interest rates and no origination fees. At least half-time enrollment and a borrower credit score minimum of 680 are required. While there is no set maximum on these loans, the minimum loan amount is rather high at $10,000.
There is no additional 0.25% rate discount offered for autopayments. Instead, ELFI requires all borrowers to make automatic electronic payments and says that an autopay discount is already reflected in the rate you receive upon approval.
ELFI is one of the few private lenders that offers full deferment while the student is in school and a six-month grace period after the student graduates, leaves school or drops below half-time enrollment. They also offer interest-only and $25 fixed payments while the student is attending school.
ELFI prides itself on its customer service. Every borrower is assigned a personal loan advisor to help during each step of the loan process. And they currently have a nearly perfect rating on Trustpilot.
6. Brazos Parent Loan
Brazos Parent Loans come with the widest variety of repayment terms on this list: five, seven, 10,15, and 20-year terms. Also, these loans are open to any creditworthy adult, not just parents.
These student loans for parents come with most of the features that you’d expect like coverage for up to the total cost of attendance, no fees and fixed and variable interest rates. Also, a 0.25% rate discount is available to borrowers who sign up for automatic payment.
Brazos is a bit unique in that they allow borrowers to see their rates before they apply. On their website, they publicly display the rates that they’re currently offering for five different credit score ranges.
Unfortunately, Brazos is one of the parent loan private lenders that do not allow any modified in-school payments. Full repayment begins immediately after loan disbursement. However, they do offer active-duty military deferment for up to 36 months.
7. SoFi Parent Loan
SoFi offers parent loans for college students that come with 5, 10, and 15-year terms, fixed or variable rates, and can cover up to the total cost of attendance
SoFi will allow interest-only payments while the student is in school. However, half-time enrollment is required and the $5,000 loan minimum is higher than many of the other lenders on this list.
SoFi loans also come with potential future benefits. If you take out another SoFI loan down the road, you’ll receive a 0.125% rate discount. And your SoFi Parent Loan could qualify you for a $500 discount on SoFi Home Loan origination fees as well.
Plus, SoFi members get access to free financial planning appointments with SoFi’s Certified Financial Planners.
Parent PLUS Loans vs. private parent student loans
We generally recommend Parent PLUS loans as the best student loans for parents because of the federal benefits they offer. Because federal loans can be repaid on income-based plans, they offer a level of payment flexibility that private loans simply can’t match.
But private loans have the benefit of lower fees. None of the private lenders on this list charge loan disbursement fees, whereas Parent PLUS loans charge 4.236%. So for every $10,000 borrowed, you’d save $423 in fees by choosing one of the top private parent loans instead of a PLUS loan.
Also, if you have very good credit, you might want to try for a lower interest rate. All approved PLUS loans receive a 5.30% rate, regardless of credit score. However, qualified borrowers could qualify for more affordable rates with a private lender.
Finally, a private loan is best for parents of graduate students since parents wouldn’t be eligible for a Parent PLUS loan. However, keep in mind that graduate students can take out Grad PLUS Loans in their own name up to the full cost of attendance.
Taking out parent loans vs. cosigning student loans
Another way to help your child with college financing is to cosign their private student loans. The difference between the two options is that your child bears no repayment responsibility for a parent loan and parent loans have no bearing on their credit or ability to qualify for future financing.
If you’d like for your child to help with repayment of their student debt, cosigning could be a better option than taking out a parent loan. Plus, it could help the student build their credit history while they’re attending school.
Some lenders might also offer more benefits or payment flexibility options with their private student loans. With an Earnest private student loan, for example, borrowers get a nine-month grace period and can even skip a payment once per year. See our full list of the best private student loans.
However, having student loan debt on your child’s credit report will also raise their debt-to-income ratio. And that could hurt their chances of qualifying for a mortgage or other form of financing after graduation.
How to apply for parent student loans
If you decide that a Parent PLUS loan is right for you, you can start the Direct PLUS Loan Application here. The Federal Student Aid office says that the application takes about 20 minutes to complete. You’ll need to provide:
- A verified FSA ID
- The student’s personal information
- School name
- Your personal information (including Social Security Number)
- Your employer’s information
If you decide to apply for parent loans from private lenders, you’ll want to start by checking your credit score and reports. If you notice any errors, reach out to each credit bureau to have them removed from your report(s) before applying for a parent loan.
If your credit looks good, you can apply directly online with any of the lenders listed above. According to myFICO, as long as you finish rate shopping within 30 days, multiple inquiries should have little to no effect on your credit score, so make sure to get several rate quotes before choosing the right lender for you.