Many or all of the companies featured provide compensation to LendEDU. These commissions are how we maintain our free service for consumers. Compensation, along with hours of in-depth editorial research, determines where & how companies appear on our site.
Many parents love nothing more than to see their children receive a college education that can land them a great job. But with the cost of college continuing to climb, they might doubt their ability to pay for that education out of pocket.
Luckily, parents can consider taking out parent student loans through the Department of Education or private lenders. These loans require a strong personal credit history and will be taken out in the parent’s name.
To learn more, compare the federal and private student loans for parents below.
In this article:
- What is a parent student loan?
- Compare parent student loans
- Federal Parent PLUS loan
- Best private student loans for parents
- Steps to take before you apply
- Repaying student loans as a parent
What is a parent student loan?
A parent student loan is a loan that a parent or guardian can get to pay for education costs on behalf of an eligible student. Repayment of parent student loans is the responsibility of the borrower, not the student.
Students can agree to make payments toward parent loans but they’re not required to do so. The amount you can borrow with a parent loan depends on whether you’re seeking federal or private funding, the cost of attendance at the student’s school, and other amounts of financial aid received.
Compare parent student loans
Use the table below to help you select a loan that best fits your needs. Each of the options in the table are discussed in more detail further down the page.
|Loan||Variable rates (APR)||Fixed rates (APR)||Origination fee||Term lengths|
|Federal Parent PLUS||N/A||6.28%||4.228%||10 – 25 years|
|College Ave||1.19% – 11.98%||3.49% – 12.99%||None||5 – 15 years|
|ELFI||1.30% – 11.52%||3.20% – 11.99%||None||5, 7, or 10 years|
|Earnest||0.94% – 11.44%||3.24% – 12.78%||None||5 – 15 years|
Federal Parent PLUS loan
The federal PLUS Loan program allows parents to borrow money for undergraduate or graduate education. You can take 10 to 25 years to repay a parent PLUS Loan. The maximum amount you can borrow is the cost of attendance, as determined by the school, less any financial aid the student has already received.
Private parent student loans can follow the same guidelines, but they don’t always. For example, you might be limited to borrowing $50,000 or $100,000, depending on the private lender. Repayment terms for private parent student loans may also be capped at 10 or 15 years.
To be eligible for a parent PLUS Loan, you must not have any adverse credit history (such as bankruptcies) and your child must be attending school at least half-time. Before applying for a Parent PLUS Loan, your child should fill out the FAFSA to see what other aid he or she is eligible for. The FAFSA isn’t required to apply for private parent student loans, though lenders will typically check your credit history and income.
Here are some additional key details about Parent PLUS Loans:
- Fixed Rates (APR): 6.28%
- Variable Rates (APR): Not offered
- Origination fee: 4.228%
- Soft credit check: Not available; hard credit check only
- Repayment terms: 10 years (standard) or 25 years (graduated)
- In-school repayment: Partial payments, full payments, full deferral
- Grace period: 6 months after child leaves school
Best private student loans for parents
Parents also have the option to apply for private student loans. These loans are issued by private lenders and aren’t affiliated with any federal government education loan program.
Private parent student loans could be a good option for parents who want to maintain control of the loan funds. Any money released for the loan will be sent right to the parent, not the child. But you’ll need a good credit score to take out private loans. If your credit isn’t great, you’ll have a higher interest rate.
But, it’s important to remember that private parent loans don’t enjoy the same protections as federal PLUS Loans. For example, Parent PLUS Loans that are consolidated into a Direct Consolidation Loan may be eligible for Public Service Loan Forgiveness while private student loans are not.
If you’re looking for those kinds of benefits, you may be better off reserving private parent student loans as a last-resort option. And if you do think you’ll need to take out private loans, it’s important to research the options carefully to find the right lender.
Best overall: College Ave parent student loan
Editorial Rating: 4.9 out of 5
- Up to $2,500 of the loan is delivered right to the parent to be used as needed
- You can choose your repayment plan and term
- No application, origination, or prepayment fees
College Ave is an online lender that offers different types of student loans, including parent loans. The Wilmington, Delaware-based company was founded in 2014 with the goal of offering a less complicated path to student borrowing.
College Ave is notable for offering flexible repayment options that are designed to work for different parent budgets. Loans are available for parents, as well as grandparents, guardians, and other relatives such as aunts or uncles.
The College Ave Parent Student Loan is our highest-rated student loan for parents. Here is some more information about this loan:
- Fixed APR: 3.49% – 12.99%
- Variable APR: 1.19% – 11.98%
- Loan amounts: $1,000 – 100% of the school-certified cost of attendance
- Repayment terms: 5 – 15 years
- In-school repayment: Paying the interest each month is mandatory. After that, you can pay as much or as little as you want.
- Grace period: None
- Unique benefits: Parents can get up to $2,500 of the loan delivered to them so they can control the spending on extra educational expenses.
Best for deferred payments: ELFI parent student loan
Editorial Rating: 4.6 out of 5
- Every applicant receives a Student Loan Advisor to guide them through the process
- Payments can be deferred while the student is in school
- Prequalify without impacting your credit score
ELFI, short for Education Loan Finance, is a division of Tennessee-based Southwest Bank. Launched in 2015, ELFI provides undergraduate, graduate, and parent student loans as well as student loan refinancing for eligible borrowers with a credit score of 680 or better.
While some private lenders require in-school repayment, ELFI allows parents to defer making payments while their student is attending school. You could make payments against the principal if you’d like to do so, but you won’t be penalized if you don’t.
Parents also get a break in the form of a six-month grace period after their student leaves school. Similar to the in-school deferment, no payment is due during the grace period.
Here is some more information about this loan:
- Fixed APR: 3.20% – 11.99%
- Variable APR: 1.30% – 11.52%
- Loan amounts: $1,000 – 100% of school-certified costs of attendance
- Repayment terms: 5, 7, or 10 years
- In-school repayment: No payments are required while the student is attending school, though parents do have the option to make payments.
- Grace period: Borrowers have a six-month grace period in which no payment is due
- Unique benefits: ELFI lends to parents, grandparents, siblings, aunts, and uncles of dependent undergraduate and graduate students.
Best for no fees: Earnest parent student loan
Editorial Rating: 4.4 out of 5
- No application, origination, prepayment, or late fees
- You have 9 months after graduation until you have to make full payments
- Check your eligibility without impacting your credit score
Earnest is a San Francisco-based fintech lender that offers personal loans, credit cards, and student loans. The company offers parent student loans to borrowers who have good credit scores and aren’t carrying large amounts of non-mortgage debt.
One of the features that sets Earnest apart from other lenders is the skip-a-payment option. You can skip a payment once every 12 months as long as your loan is in good standing and you’ve made at least six consecutive, on-time payments.
Skipping a payment does extend your loan payoff date and accrued interest could increase your monthly payments slightly. But this is a nice benefit to have if you find yourself in a financially tight spot one month and need to delay payment. Earnest also doesn’t charge any application, origination, or late payment fees.
Here are some other details about this loan:
- Fixed APR: 3.24% – 12.78%
- Variable APR: 0.94% – 11.44%
- Loan amounts: $1,000 – 100% of the cost of attendance as determined by the school
- Repayment terms: 5 – 15 years
- In-school repayment: Parents can make interest-only payments or full payments while the student is enrolled.
- Grace period: Parents who make interest-only payments while the student is enrolled can continue those payments for nine months after they graduate. At the end of the nine months, full payments begin.
- Unique benefits: Borrowers can qualify for a 0.25% autopay discount when they enroll in automatic payments.
Steps to take before you apply for a parent student loan
If you are unsure what type of parent loan to take out, check out our Parent PLUS Loan vs private student loan guide, which explains which is likely better for you depending on your situation.
The first thing you’ll want to research for when looking into a parent student loan program is the interest rate. A lower rate will reduce the overall amount you’ll have to pay back in interest.
The second factor to consider are the repayment plans. Decide how long you’d like to make payments for and what your monthly payment will be, and then look for a loan that can meet those terms.
Lastly, consider if you want to make payments while in school or defer payments until after your child leaves school. While making payments right away can help save money, some parents might not be able to afford it immediately.
Once you select a company to borrow from, you’ll need to gather all of the necessary information to apply. This information may include, amongst other things:
- Personal information: credit score, credit history, driver’s license, Social Security number
- Employment information: proof of income, employer information, 1099 statements
- Education information: school the child is attending, additional student aid, cost of attendance
>> Read More: Types of student loans
Repaying student loans as a parent
Parents have a variety of repayment options with the federal Parent PLUS loan and private parent student loans. Some options allow you to begin repaying the loan while your child is still in school. Other plans allow you to wait until they are out of school. You’ll want to consider those terms carefully to be sure to find the plan that works best for you.
After your child graduates, you can even refinance Parent PLUS loans in your child’s name. But, of course, this will only work if your child agrees to it, meets certain criteria, and if they can qualify for a loan on their own.
If you take a student loan out in your name, there is no way to force your child to refinance the loan payments in their name. However, many parents have found this funding source invaluable for protecting their child’s financial health while funding their education.
Author: Rebecca Lake