Are There Parent Student Loans for College?


If you’re a parent looking for options to help your child pay for college, you may not know that there is actually a type of student loan made just for that. Parent student loans, or just parent loans, are designed for parents to help put their children through college.

Types of Parent Loans

Just like with traditional student loans, there are two types of parent loans out there: federal and private.

Federal Parent PLUS Loans

These loans are called Direct PLUS Loans, and are available to parents and graduate students. (They are commonly known as Parent PLUS Loans when made to a parent, or Grad PLUS Loans when borrowed by a graduate or professional student.) If your child’s school participates in the Direct Loan Program, you can borrow a Parent PLUS Loan to help pay for college expenses.

The main requirements for obtaining a Parent PLUS Loan include:

  • Being the biological, adoptive, or in some cases, stepparent of a dependent undergraduate student going to college at least half-time at an eligible school
  • Having a strong credit history

The current fixed interest rate on Parent PLUS Loans disbursed between July 1, 2019, and July 1, 2020, is 7.08%.

There is also a loan fee on all Direct Loans. The current loan fee for loans disbursed between October 1, 2019, and October 1, 2020, is 4.236%.

Private Parent Student Loans

Private parent loans, like private student loans, are loans made available to parents from a private lender. Because all private loans come with different interest rates and terms, it pays to shop around to find the best fit.

One benefit of private parent loans is that their rates can sometimes be lower than federal Parent PLUS Loans. If you have a strong credit history and good credit score, going the private route may be worthwhile to save more money. Do your research and compare lenders carefully to make sure you’re getting the best deal possible.

What to Consider Before Taking Out a Loan

Many parents want to help make their child’s college dream a reality, but it’s important to not let this overshadow other financial goals, such as saving for your retirement. Before you take out a parent student loan, make sure that:

  • Your child has maxed out their own federal student loan options.

Don’t take on debt if your child is still eligible for federal student loans. Federal student loans have lower interest rates and more flexible terms than federal Parent PLUS Loans. Avoid missing out on these benefits, and make sure your child has exhausted their federal student loan options first.

  • You are in a solid financial position.

We know any parent wants to do whatever they can to help their children, but at this point, putting your own financial goals is crucial. Paying off any existing debt (such as credit cards, your vehicle, or a mortgage) should be put first before taking on additional college debt.