Parent’s Ultimate Guide to Applying for Private Student Loans

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Knowing how to apply for a student loan is vital if your children are getting ready to go to college. Around 27 percent of all college costs are paid for with borrowed money, according to Sallie Mae’s 2017 report, “How America Pays for College,” with parents making up nearly 30 percent of those borrowers.

private student loans

Image credit: Sallie Mae

When a student exhausts all federal student loan options, they can apply for private student loans to cover any gap in funding. However, private lenders, unlike the federal government, all have their own underwriting criteria and credit requirements. Often, college students don’t have the credit history or income to qualify for these loans — but their parents do.

“Parents should borrow to pay for a child’s college education only after the child has exhausted his or her eligibility for the Federal Stafford Loan,” according to student loan expert Mark Kantrowitz.

To help fill remaining financial aid gaps, parents can apply for a federal Parent PLUS Loan or for private student loans for parents. Read on to find out when you should apply for private loans, which lenders offer private student loans to parents, and what information you need for a parent loan application.

Applying for private student loans as a parent

Before applying for private student loans as a parent, it’s important to make sure that applying for a loan is a good financial decision for your family.

“Parents should borrow no more in total for all their children than their annual income,” Kantrowitz advised. “If total parent loan debt is less than parents’ adjusted gross income, the parents can afford to repay the parent loans in 10 years or less.”

You’ll want to make sure that you have a good credit score so you can get approved, as well as receive the most favorable interest rate in the case of private student loans. Check out our guide to getting your FICO credit score for free — the score used by most lenders when evaluating loan applicants.

Kantrowitz also suggests getting a copy of your credit report before applying (you can access your reports from all three credit bureaus for free at Although you can’t view your credit score on your credit report, checking your reports ahead of time will give you the chance to fix any errors that could hurt your score and prevent you from qualifying for a loan or more favorable terms.

After assessing your situation, you can move on to the next step of determining if a private loan is your best option.

Parent PLUS Loans vs. private student loans for parents

You might be eligible to obtain a Parent PLUS Loan through the Department of Education to cover educational costs for a dependent child. They need to be enrolled at least half-time in an eligible school and working toward an undergraduate degree.

As a parent, you can borrow up to the cost of attendance as determined by the school, minus other financial assistance that you or your child receives. However, weigh pros and cons of PLUS loans versus the pros and cons of private loans. Some key things to consider:

  • Credit: Both private student loans for parents and Parent PLUS Loans consider a parent’s credit. However, Kantrowitz advised that private lenders usually have stricter criteria for approvals than Parent PLUS Loans. All PLUS loans check for is an “adverse credit history,” which, according to Kantrowitz, includes payments that were 90 days or more delinquent on more than $2,085 in debt during the prior two years, or a derogatory event such as a foreclosure or bankruptcy within the past five years.
  • Interest rate: Both private loans and Parent PLUS Loans charge interest. The interest rate for all Parent PLUS Loans disbursed between July 1, 2017, and July 1, 2018, is 7.00%. Individual lenders set interest rates on private student loans, which vary according to the credit profile of each applicant. Parents with excellent credit might qualify for lower fixed interest rates from private lenders than through Parent PLUS Loans, according to Kantrowitz.
  • Fees: There is a 4.264 percent origination fee for Federal Parent PLUS Loans for the 2017 to 2018 school year. Many private lenders, however, do not charge any fees, according to Kantrowitz.

There’s one benefit for parents to apply for a Parent PLUS Loan, even with bad credit. “If a parent is denied a Federal Parent PLUS Loan, the student can become eligible for the higher unsubsidized Federal Stafford loan limits available to independent students,” Kantrowitz said. “Some families prefer this, even though the limits are only $4,000 or $5,000 a year higher.”

If, as a parent, you’re concerned you don’t have good enough credit to qualify for a federal or private loan, you may wish to apply for a Parent PLUS Loan to see if you can help your child to get this extra access to federal funds.

How to apply for private student loans for parents

Once you’ve taken advantage of all the federal aid your family has available, and you’ve decided taking out a private student loan as a parent is the best choice for covering your child’s college costs, it’s time to apply.

1. Gather the information needed for parent loan application

The nice thing about applying for private student loans is that it can be done online. Before you begin the application process, you should gather the information needed for a parent loan application. This can include:

  • Your name, address, Social Security number, and contact information
  • Information about your income and work history
  • Your child’s Social Security number
  • Information about the school your child will be attending, including the state, grade level, and field of study
  • The cost of attendance for the college program your child will be attending
  • The estimated amount of financial aid your child will receive
  • The anticipated college graduation date for your child
  • The information about what academic term the loan will be used to pay for

Sallie Mae indicates the online application process takes around 15 minutes. It’s a good idea to get your paperwork in order before you begin the process of applying for a private loan. However, lenders will allow you to save an application so you can return to it and complete it later if you don’t have all the documentation you need at hand.

2. Compare private student loan offers

If you decide that applying for a private student loan is the right choice for you as a parent, you need to understand the practicalities of how to apply for a student loan.

First and foremost, this means finding a lender. There are a number of different private student loan lenders that will loan money to parents to pay for their children’s education. Some of these private student loan lenders include:

  • SoFi personal loans: SoFi personal loans offer low fixed interest rates ranging from 7.08% to 15.37%. Variable rates range from 5.81% to 14.11% with autopay. Parents can choose three-, five-, or seven-year repayment terms.
  • College Ave private loans: The College Ave private loan offers fixed interest rates of 5.29% to 12.07% and variable rates of 3.69% to 10.94%. Repayment terms range from eight years to 15 years.
  • Sallie Mae private loans: Sallie Mae offers a fixed interest rates of 5.74% to 11.85% and varied interest rates of 4.12% to 10.98%. Repayment terms range from five years to 15 years.

It’s important to shop around and get offers from several private student loan lenders before going through with the full application. This will allow you to find the best rates and terms available without performing a hard pull on your credit.

3. Submit your application

Once you make a final decision on the best loan offer, submit your application. At this point, the lender will perform a hard credit inquiry, evaluate your credit history and financial profile, and notify you of whether your application is approved or denied.

If you are approved for the loan, you will need to sign the loan paperwork electronically and the funds will then be disbursed.

If you are denied a private loan for your child, you may be able to appeal the decision. You could also consider applying with cosigner who is willing to cosign loans for you or for your child.

4. Make a plan to repay private student loans

If you’re a parent who is thinking about taking out private student loans for your children, repaying these loans might be a top priority after your son or daughter graduates. Fortunately, you have options to get this debt taken care of.

There are many great lenders that will allow you to consolidate or refinance Parent PLUS Loans. Consolidating or refinancing could potentially lower your interest rate so you could save money on repayment.

If you have taken out private loans and your children can repay them, refinancing those loans into your children’s names could be a good option if your children have good enough credit to qualify for a loan. You could also be aggressive about making extra payments for loans you’re responsible for paying back so you retire the debt as soon as possible.

The key is to find a plan that works for you so you can try to student debt taken care of and your retirement without worrying about owing money to student loan lenders.

Interested in refinancing your Parent PLUS loans?

Here are the top 6 lenders of 2018!
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1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit We also have several resources available to help the borrower make a decision at, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Visit Earnest
2.80% – 6.38%1Visit Laurel Road
2.48% – 7.52%2Visit SoFi
2.57% – 6.65%3Visit CommonBond
2.72% – 8.17%4Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.