How Do Parent Student Loans for College Work? 2025 – 2026 Guide to Parent PLUS Loans and Beyond

Federal Parent PLUS Loans are often the best starting point for parents, offering fixed rates, flexible repayment options, and federal protections. However, for those with strong credit, private parent loans may provide lower interest rates and no origination fees, making them a cost-effective alternative.

Comparing federal and private options can help you find the ideal balance between affordability, flexibility, and support for your child’s education.

Table of Contents

1. Federal Parent PLUS Loan
2. What is a parent student loan?
3. Pros and cons of parent student loans for college 
4. Steps to apply for a parent student loan
5. How to repay student loans as a parent
6. FAQ 

Federal Parent PLUS Loan

For parents who want to keep their child’s financial burden low or have already maxed out their child’s federal loan options, a Parent PLUS Loan can be an excellent option to cover remaining educational costs.

Parent PLUS Loans often make a good first choice due to federal protections and flexible repayment options, though they come with a higher interest rate and an origination fee compared to many private loans.

Term	Details
Rates	Fixed at 9.08%
Origination fee	4.228%
Credit check?	✔️
Loan limits	100% of cost of attendance, less other financial aid
Terms	10 – 25 years
In-school repayment options	Partial, full, or deferred
Grace period	6 months after the child leaves school

To qualify for a Parent Plus Loan, your child must attend school at least half-time. The loans don’t require a specific credit score. Instead, eligibility hinges on a review of your credit history for “adverse credit events.” The Department of Education defines “adverse credit history” as:

• A debt that’s 90 days or more delinquent with a balance over $2,085
• A bankruptcy, foreclosure, repossession, tax lien, wage garnishment, or default determination within the last five years

If you have adverse credit, you may still be able to qualify by either:

1. Getting an endorser: Similar to a cosigner, this individual agrees to repay the loan if you can’t. However, your child cannot serve as an endorser.
2. Appealing your credit decision: You can appeal if you can provide documentation of extenuating circumstances. Note that if you go this route, you’ll need to complete PLUS Credit Counseling as well.

For further details on options for parents with credit challenges, see our student loans guide for parents with poor credit.

Parent PLUS Loans offer key federal protections that can make repayment easier if finances are tight. These benefits include:

• Income-Contingent Repayment (ICR): By consolidating your loan, you can qualify for ICR, which adjusts monthly payments based on your income.
• Deferment and forbearance: Temporarily pause payments if you face financial hardship, unemployment, or other qualifying situations.
• Public Service Loan Forgiveness (PSLF): If you consolidate and work for a qualifying employer, you could be eligible for loan forgiveness after meeting PSLF requirements.

These protections can make Parent PLUS Loans a flexible, secure choice for many families.

Tip

Before applying for a Parent PLUS Loan, your child should fill out the FAFSA and wait to receive their financial aid award letter to see what other aid they can get.

What is a parent student loan?

A parent student loan is a loan taken out by parents or other supportive adults, like grandparents or guardians, to help cover a student’s education expenses. Unlike student loans in the student’s name, parent loans place full responsibility for repayment on the adult borrower, giving the student a debt-free start after graduation.

Here’s how parent loans and student loans compare:

• Eligibility: Parent loans are available to parents and supportive adults, while only students can apply for student loans directly.
• Credit requirements: Parent loans generally require a credit check, whether federal Parent PLUS Loans or private options. In contrast, federal student loans don’t require a credit check, making them more accessible for students with limited credit history.
• Loan limits: Parent loans often offer higher borrowing limits—up to the full cost of attendance (COA) minus other aid—while student loans have annual and lifetime caps.
• Interest rates: Federal Parent PLUS Loans have a fixed rate, while private parent loans may offer either fixed or variable rates, sometimes at lower rates for those with excellent credit. Federal student loans generally have fixed rates, but private student loans can vary.
• Repayment responsibility: With parent loans, the adult borrower is responsible for repayment, though the student can help voluntarily. Student loans, on the other hand, are solely the student’s responsibility after graduation.
• Repayment options: Federal Parent PLUS Loans offer income-driven repayment (through consolidation) and deferment, along with eligibility for PSLF. Private parent loans may have limited repayment flexibility. Federal student loans also come with income-driven repayment options, deferment, and certain forgiveness options.
• Fees: Federal Parent PLUS Loans charge a 4.228% origination fee, while private parent loans may have no fees. For student loans, fees vary by loan type for federal options, and private student loans have varied fee structures.
• In-school deferment: Federal parent loans offer deferment until after the student graduates or leaves school, plus a six-month grace period. Many private parent loans also allow deferment, though some may require at least interest-only payments during this time.

These differences make parent loans a practical choice for those looking to support a student’s education without adding to their debt load directly. For families needing flexibility, the federal Parent PLUS Loan offers several protections, while private options can provide lower rates and fees for those with strong credit.

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Pros and cons of parent student loans for college 

Deciding whether to apply for federal or private parent student loans isn’t always a no-brainer. Here are some pros and cons to help decide:

Pros and cons of Parent PLUS Loans

Pros

• Not income-dependent

  Income level doesn’t impact loan approval amounts.

• Fixed rates

  Fixed rates mean consistent monthly payments.

• Deferred payments

  Delay payment until your student graduates, drops below half-time, or withdraws.

• Payment plan 

  Enroll in an income-contingent repayment plan to suit your budget.

• 100% costs covered

  Borrow as much as your student needs, minus financial aid.  

• Long terms

  Federal loans may allow borrowers up to 25 years to repay. 

• Potential loan forgiveness

  “Forgiven” aren’t required to pay back the loan balance.

Cons

• Need-based

  You’ll need to prove financial need.

• Fewer term options

  There isn’t much flexibility for borrowers planning for fast repayment.

• Credit history requirement

  Parent borrowers with turbulent credit history, such as bankruptcies, may have difficulty getting approved.

• No automatic deferment

  Unless you request deferred payments, repayment automatically starts upon loan disbursement.

• Loan fees

  There’s currently a 4.228% loan fee in addition to interest. 

Pros and cons of private parent student loans

Pros

• Not need-based

  Potential borrowers aren’t required to demonstrate financial need.

• 100% costs covered

  Many private lenders offer 100% COA, minus financial aid.

• Competitive rates

  Starting fixed and variable interest rates are often lower than federal loans. 

• No fees

  Many private lenders charge no loan origination, application, or hidden fees. 

• Wide range of potential borrowers

  Stepparents, legal guardians, other relatives, and even family friends may also apply. 

Cons

• Income and credit requirements

  If you’re approved with poor credit or low income, you might pay way more over the life of the loan.

• Limited borrower assistance

  Assistance, such as loan forgiveness and repayment plans, are scarce.

• Variable rates 

  Even low variable rates can create unpredictable and potentially high monthly payments.

Steps to apply for a parent student loan

Taking out a parent student loan is a process best handled with forethought and patience.

The right parent loan for you starts with your creditworthiness. If you have poor credit, I will typically recommend the Parent PLUS Loan over a private lender. Even though there is a credit check, you will typically get more favorable options with the PLUS Loan. If you have great credit, a private student loan tends to be the better option due to lower rates and no origination fees.

Crystal Rau, CFP®

Give yourself time to explore your options, and follow these steps to ensure you’re getting the best loan for you and your family:

1. Compare rates. Research each private lender’s rates and compare them to the rate you’d get with a federal parent loan. Note the four or five lowest possible rates.
2. Prequalify. Check your personal rates with the lenders you prioritized in step one. Once you know what rates you’ll qualify for with each lender, it’s time to evaluate your potential loan terms.
3. Weigh your repayment obligations. Decide what monthly payment you can afford and whether in-school or deferred payments are better for your budget. While making payments right away can help save money, some parents might not be able to afford it immediately.
4. Consider standout features. You may find that your options are similar across lenders. If so, note what each lender offers that the others don’t. Of those features, which ones will make a substantial difference in your borrowing experience? 

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Tip

If you are unsure what type of parent loan to take out, check out our Parent PLUS Loan vs. private student loan guide to help you choose the best option.

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Once you select a company to borrow from, gather all the necessary information to apply. This information may include:

• Personal information: Driver’s license or other government-issued photo ID and Social Security number
• Financial information: Pay stubs, tax returns, and 1099 statements
• Education information: Your child’s school, any additional aid they’ll receive, and their COA

To help save time, gather this information before you start prequalifying with different lenders. That way, when you find a loan offer you like, you can jump right into the application without missing a beat.

How to repay student loans as a parent

Parents have various repayment options with the federal Parent PLUS Loan and private parent student loans. Your lender may let you defer payments while your child is in school, but that might not be the best option for your financial situation.

Here’s a quick look at the differences between in-school repayment and deferred to help you decide:

	In-school repayment	Deferred repayment
Payments begin …	30 – 45 days after loan is disbursed	6 – 9 months after student leaves school
Pay toward …	Interest only or interest + principal	Interest + principal
Interest still accrues?	Yes	Yes
Key advantage	Pay down loan faster	More affordable in the short term
Key disadvantage	May not be budget-friendly	Pay more in interest

Note that deferring payments on federal parent loans delays your eligibility for federal student loan forgiveness. 

If you hope to take advantage of this, your loan servicer can help you find ways to keep your monthly payments at reasonable levels while allowing you to make progress toward forgiveness.

In addition to comparing the benefits and drawbacks of in-school and deferred payments, you’ll also want to consider:

• The length of your repayment period
• Whether you can afford to pay extra toward your principal
• The potential impact of each repayment method on your future financial goals

After your child graduates, you may be able to refinance Parent PLUS Loans in their name. But this will only work if your child agrees and can qualify for a loan independently. 

Refinancing won’t make sense in all situations, but it’s an option you and your child can explore together. Whether you and your child decide to refinance, you will have protected their health while funding their education—and that’s something to be proud of.

FAQ 

Can I qualify for parent student loans with bad credit?

Yes, you can still qualify for parent student loans with bad credit. You’re more likely to get approved for a federal parent student loan as long as you don’t have previous loans with late payments or bankruptcies. But if you do, you may still be eligible if you meet other qualifiers.

With private parent student loans, your path may be more difficult. Many lenders choose to keep their credit requirements close to the vest, but they tend to take a holistic approach, where your income and other factors come into play. You may get approved at a higher rate.

Can parent student loans be deferred?

Yes, with federal and most private parent student loans, you can defer payments, typically up to several months after your student graduates. 

You may defer a Parent PLUS Loan for six months after your student graduates or until s/he leaves the program or drops below half-time status. Typically, you may defer a private loan for six to nine months, but some lenders require you to at least pay the interest during attendance.

Can a parent student loan be transferred to the student?

No. Technically speaking, a federal Parent PLUS Loan cannot be transferred to a student. However, your student can refinance it by opening a private refinance student loan and using his/her new loan to pay off your current federal loan. You can also use this process to transfer a private parent student loan.

Are there any tax benefits for parent student loans?

Yes, you can deduct as much as $2,500 from your taxes for the interest you paid on any federal and private student loan, including parent student loans, as long as the loan was for you, a spouse, or a dependent.