Before you raid your retirement accounts to pay for your child’s college education, make sure you’ve considered all your options — including private student loans for parents.
Many private lenders offer specifically designed student loans for parents. Unlike cosigned private student loans, these loans are held solely in your name. So you can not only help your child avoid student debt, but you can also have more control over it.
Sound like a good fit? Here’s how to find your best parent loans for college — and your financial needs.
How to shop for student loans for parents
You can get both federal and private student loans for parents. The Federal Student Aid Office offers Parent PLUS Loans, which are held solely by the parent of a college student. Similarly, some private lenders also offer student loans that are held by the parent alone.
However, Parent PLUS Loans currently carry the highest interest rates of any federal student loans. That means you might be able to save money by applying for private parent loans rather than Parent PLUS Loans.
As with any financial product, you’ll need to shop around to find a good deal on student loans for parents. Here are the key features we looked for in choosing our picks for the best parent loans for college.
Low student loan rates
When you’re choosing student loans for parents, interest rates are key. In order to make sure you’ll incur the least amount of debt possible, compare interest rates for both private and federal loans.
Low or no loan fees
Student loans for parents can come with charges such as student loan origination fees. Watch out for these costs and make sure to compare annual percentage rates (APRs), which will reflect the full cost of the loan — including any fees.
Student loans designed for parents
Allowing parents to cosign their children’s student loans is common. However, if you’re looking for a loan that won’t add to your daughter or son’s student debt, you’ll want to find lenders that offer loans directly to parents.
Eligibility requirements you can meet
Lastly, you might want to consider your creditworthiness. You’ll need a good credit score, reflecting a solid credit history and a low debt-to-income ratio, to qualify for most student loans for parents. If you’re unlikely to qualify on your own, you might need to apply with a cosigner.
4 best parent loans for college
Of course, having a starting point can help you with your search for the best student loans for parents. Here are four good options among the private lenders that currently offer parent student loans.
1. Citizens Bank Student Loan for Parents
- Both fixed and variable rates available for Citizens Bank student loans for parents
- Rate discount of up to 0.50% offered
- No origination fees or prepayment penalties
- Parent student loan terms of five or 10 years
- Loan amounts up to $350,000 or certified cost of attendance
- In-school interest-only or immediate repayment options
2. College Ave Parent Loan
- Fixed and variable rates available on College Ave student loans for parents
- Rate discount of 0.25% after autopay enrollment
- No origination fees or prepayment penalties
- Student loan terms of five to 15 years
- Loan amounts from $1,000 up to certified cost of attendance
- Option to disburse up to $2,500 directly to the parent for additional out-of-pocket expenses
- Lower in-school payments or immediate repayment options
3. Sallie Mae Parent Loan
- Fixed and variable rates available
- 25% rate discount for autopay enrollment
- No origination fees or penalties for prepaying Sallie Mae student loans
- 10-year term on student loans for parents
- Student loan amounts from $1,000 up to certified cost of attendance
- Option for interest-only payments while student is enrolled, for up to 48 months
- Available to spouses and other student benefactors, not just parents
- Free quarterly FICO credit score updates
4. Wells Fargo Parent Loan
- Fixed and variable rates
- Rate discounts of up to a combined 0.50% for enrolling in autopay and Wells Fargo checking account
- No origination fees or prepayment penalties
- Term of 15 years
- Loan amounts up to $25,000 per year, with a lifetime limit of $100,000
- Request up to 48 months of interest-only payments when your child is enrolled at least half-time
How to decide if a parent student loan is right for you
In addition to shopping around among private lenders, you should compare student loans for parents to other college financing options. Here are some questions to consider:
Is your credit good?
To figure out if you could benefit from private student loans for parents, consider your creditworthiness. The better your credit, the more likely it is that you’ll qualify for a parent loan — along with rates that are low enough to make them worth your while. If you don’t know your current credit score, you can quickly check it with free online credit check tools.
Typically, you’ll need good to excellent credit (a FICO score of around 700 or higher) to get the best rates on parent student loans.
If you qualify for low rates, you could save a lot in loan fees and interest, especially if you can beat the 7.60% interest rate and 4.248% loan fee on Parent PLUS Loans. For example, if you borrowed $20,000 from a private lender at 6.00% — instead of the federal rate of 7.60% — you’d pay about $2,000 less in interest over the 10-year repayment term.
If your FICO score falls below that 700 benchmark, on the other hand, a Parent PLUS Loan might be a better choice. Parent PLUS Loan eligibility requirements are easier to meet than most private lenders’ credit standards. While private student loans require good credit, PLUS Loans simply require that you don’t have “adverse credit.”
Even if you do have credit problems, it could be worth applying. If your Parent PLUS Loan is denied, the Federal Student Aid Office will allow your child to borrow more Direct Unsubsidized Loans to help cover any gap in funding.
Can you afford to repay parent student loans?
Some parents want to own a student loan to simplify the borrowing process and keep their child out of student debt.
Of parents who borrowed for their child’s college, two-thirds say they don’t regret it, according to our parent student loans survey, although over half of parents surveyed reported student debt balances of $40,000 or more.
Still, you should borrow responsibly and take on parent student loans only if you’re confident you can afford to repay them. Limit loan amounts as much as possible, and choose a student loan term that will result in affordable monthly payments.
Also, make sure you can continue to prioritize other important financial goals, such as saving for your retirement, alongside repaying student loans and covering college costs.
Are you and your child repaying student loans together?
Some parents might view repaying student loans as a responsibility their child should share. If that’s you, then cosigning a private student loan might make more sense. This way, both you and your student share equal legal responsibility for repaying the debt.
Many lenders offer cosigner release, meaning your child eventually could assume full responsibility for managing and repaying the cosigned loan. Between cosigning a student loan and taking our parent loans on your own, consider which is the better fit for your financial future.
Ultimately, student loans for parents allow borrowers to pay for college costs and control future repayment if necessary. By reviewing this guide to the best parent loans, you’ll know how to choose the borrowing option that’s right for you and your child.
The information in this article is accurate as of the date of publishing
Andrew Pentis contributed to this report.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for College Ave.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 4/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.24% – 13.24%1||Undergraduate and Graduate|
|4.07% – 11.32%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 11.35%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|6.08% – 7.22%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|