• Paying for College

Are Parent PLUS loans better than private student loans for parents?

Key takeaways

  • Parent PLUS loans are from the federal government, and private student loans are offered by private banks, credit unions and other lenders.
  • A strong credit history could lead to lower interest rates on private student loans.
  • Upcoming changes put a cap on how much you can borrow from the federal government, but borrowing limits from private lenders are determined partly by your credit score.

If your child's financial aid package isn't enough to cover the full cost of attending college, you could help them make up the difference with federal Parent PLUS loans, private student loans, or both. There are key distinctions between the two that can be beneficial for some and unfavorable for others. We've broken down these differences to help you determine which is best for you and your child's financial future.

Parent PLUS loan vs. private student loan for parents

Parent PLUS loans come from the U.S. Department of Education, while private student loans are offered by financial institutions, including banks and credit unions. Their differences could impact your choice on which to go with. Here's a quick comparison.

 

Parent PLUS loan

Private student loan for parents

Interest rate

Fixed rate set annually

Fixed and variable rates vary by lender

Fees

4.228% of the loan disbursement

No fees in most cases

Eligibility
  • No adverse credit history
  • Must be parent or legal guardian of dependent undergraduate student
  • Student must be enrolled at least half time

Credit history, debt, and income determine eligibility, interest rate, and terms.

Borrowing limits
  • $20,000 per student, per year
  • $65,000 total over the student's entire undergraduate degree

Varies by lender but typically won't exceed the COA - financial aid total

Repayment options

Prior to July 1, 2026:

  • Standard (10-year)
  • Graduated (Increasing payments over a 10-year period)
  • Extended (25-year)
  • Some income-driven plans

After July 1, 2026:

  • Standard Repayment Plan

Set by lender

Interest rate

For the 2026-27 academic year, Parent PLUS loans have a fixed interest rate of 9.07% over the lifetime of the loan.

Private student loans' interest rates depend on the lender and the borrower's credit score, credit history and income. Stronger credit likely means you'll qualify for a lower interest rate. They can have a fixed or variable rate, and it's important to compare your options to find the best deal.

Fees

Parent PLUS loans come with an origination fee of 4.228% of the loan disbursement.

Many private student loan lenders, including Citizens, don't charge an origination or disbursement fee, which could help you save thousands of dollars in the long run.

Eligibility

When you apply for a Parent PLUS loan, the government will make sure you don't have an adverse credit history. You must also be the biological or adoptive parent of a dependent undergraduate student who is enrolled at least half-time at a participating school. Some stepparents are considered eligible.

Private student loan requirements are much more stringent. Lenders will review your credit history, debt and income to determine eligibility, interest rate and terms. If you have strong credit, you could be eligible for a low interest rate.

Borrowing limits

In years past, parents could use Direct PLUS loans to borrow up to the full cost of attendance (COA) minus any financial aid their child is already receiving. However, loans disbursed after July 1, 2026 have new limits: $20,000 per student, per year and a total of $65,000 over the student's entire undergraduate degree.

If you had Parent PLUS loans disbursed prior to July 1, 2026, you can still continue borrowing up to the cost of attendance for up to three more academic years or when your child finishes school, whichever comes first.

Your borrowing limit with a private student loan is partially dictated by your credit score and history, lenders also won't typically let you exceed the COA minus financial aid total.

Repayment options

If you took out federal Parent PLUS loans prior to July 1, 2026, you have several repayment options:

  • Standard (10-year)
  • Graduated (Increasing payments over a 10-year period)
  • Extended (25-year)
  • Limited access to income-driven plans.

Loans disbursed after July 1, 2026 are limited to the Standard Repayment Plan.

Your first student loan payment is due shortly after the final disbursement is made, but you may be able to defer it until six months after your child graduates, leaves school or drops below half-time enrollment.

For private student loans, repayment terms are set by the lender when you borrow the money. Comparing terms can help you identify the best loan for your finances. You may have to start paying back the money right away, but some lenders offer deferment until your child leaves school.

Which is best for you?

The best loan for you heavily depends on your credit history and the cost of your child's education. If you have poor credit, it's much easier to get approved for a Parent PLUS loan than it is a private loan. But, if you have strong credit, a private loan could mean a lower interest rate, possibly saving you money in the long term.

Are you ready to take the next step?

Explore all of your options for paying for college by visiting the Student Hub.

If grants, scholarships and other federal aid aren't enough, consider a private student loan. With a Citizens Student Loan® for Parents†, you could help your child manage up to 100% of their college-certified costs without sacrificing your future. Plus, with Multi-Year Approval†, you'll know upfront how much money you can borrow across multiple years of college.

Already have Parent PLUS loans? Learn how you can refinance them with a Citizens Education Refinance Loan for Parents†.