SoFi Parent Loan vs. Parent PLUS Loan: Which Is the Better Option?

 June 19, 2020
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If you’re looking for a student loan to help your child pay for college, you have two options: a private or a federal student loan. In this guide, we’ll compare SoFi parent loans, which are private, with parent PLUS loans, a type of federal loan offered by the U.S. Department of Education.

By learning about both loans, you can determine which one would be better suited to your family.

SoFi parent loans vs. parent PLUS loans quick comparison

SoFi parent loans and parent PLUS loans are both designed for parents whose children are in college. But since one is private and the other is federal, their similarities largely end there.

To help you compare SoFi versus parent PLUS loans, this chart gives an overview of their terms, eligibility requirements, repayment options and application processes.

SoFi Parent loans Parent PLUS loans
Eligibility requirements Your child is enrolled full time in college; you’re a U.S. citizen or permanent resident Your child is enrolled at least half time in college; you’re a U.S. citizen or eligible noncitizen
Application process Apply for an instant rate quote with a preapproval application (soft credit pull); submit full application when you choose a loan (hard credit pull) Submit the FAFSA; work with your college financial aid office to request a parent PLUS loan
Credit requirements SoFi considers your credit score, debt-to-income ratio, income, career, education and other factors. Another parent or guardian can cosign You can’t have an adverse credit history. If you do, you can apply with an endorser who has strong credit
Borrowing limits $5,000 minimum, up to the total cost of attendance Up to the total cost of attendance, minus any other financial aid received
Rates/APRs Fixed APRs at 2.49%; variable APRs at 1.74% Fixed interest rate of 5.3% for the 2020-21 school year
Origination fees None 4.236% for loans originated after Oct. 1, 2019 and before Oct. 1, 2020
When repayment begins Immediate repayment Immediate repayment, unless you request a deferment while your child is in school and for up to six months after they graduate
Repayment options 5-, 10- or 15-year terms Standard Repayment Plan (10 years); Graduated Repayment Plan (10 years); Extended Repayment Plan (25 years); Income-Contingent Repayment, if you consolidate first (25 years)

Now that you’ve got an initial sense of how SoFi parent loans compare to parent PLUS loans, let’s take a closer look at the most important differences:

1. SoFi parent loans could have lower interest rates
2. SoFi could save you money on fees
3. Parent PLUS Loans have more flexible repayment plans
4. Parent PLUS and SoFi applications have pros and cons

1. SoFi parent loans could have lower interest rates

There are lots of factors that go into choosing a loan, including eligibility criteria and repayment options. But if your priority is saving money, take a close look at interest rates.

All parent PLUS loans come with a fixed rate of 5.3% in the 2020-21 year. This rate is significantly lower than past years’ rates, which were set around 7%. But it might still be higher than what you’d get on a SoFi parent loan, which has fixed APRs starting from 2.49% and variable APRs starting at 1.74%.

Depending on your credit, income and other factors, you could snag a rate on a SoFi parent loan that’s lower than what you’d get with a parent PLUS loan. Reducing your interest could save you a good deal of money over the long run. That said, a variable rate, unlike a fixed rate, could potentially rise over time.

Since SoFi offers an easy pre-application online, it’s worth it to check your rates. This preliminary rate quote won’t affect your credit score, and you’ll see what rate you could be eligible for.

If it’s lower than the one you’d have on a parent PLUS loan, it could be worth going with SoFi.

2. SoFi could save you money on fees

Besides potentially giving you a lower interest rate, SoFi also saves you money on origination fees; it doesn’t charge any fees for disbursing the loan.

Parent PLUS Loans, on the other hand, come with a 4.236% origination fee. If you borrowed $20,000, you’d be charged a fee of about $850 once it was disbursed.

If you’re only taking out a small loan, this origination fee probably won’t break the bank. But if you’re taking out a large amount, it significantly increases your cost of borrowing.

3. Parent PLUS Loans have more flexible repayment plans

SoFi parent loans have the potential to save you money, but they don’t come with as many repayment options as the federal parent PLUS loan. With SoFi, you must begin repaying at least the interest on your loan while your child is in school. Plus, you can only choose between a five-, 10-, or 15-year repayment term.

Parent PLUS loans, on the other hand, have a lot more options. First, you can request deferment of your loan while your child is in school. With deferment, you won’t have to start repaying the loan until six months after they graduate. (Note that interest will continue to accrue, even while your payments are paused.)

Besides deferment, you can also choose from a variety of repayment plans. The standard repayment plan, for instance, gives you fixed monthly payments over 10 years. The graduated plan also spans 10 years, but payments start small and increase over time.

If your payments are too burdensome, you can opt for the extended repayment plan, which lowers your monthly bills by spreading them out over 25 years. Finally, if you consolidate your parent PLUS loans, you can request Income-Contingent Repayment, which caps your bills at 20% of your discretionary income.

These plans can be a lifesaver if you’re struggling to make your monthly payments. They offer a way to reduce your monthly bills while avoiding student loan default.

If you’re concerned about your ability to pay back the loan, a parent PLUS loan likely has more options than a SoFi parent loan.

4. Parent PLUS, SoFi applications each have pros and cons

When comparing SoFi versus parent PLUS loans, you might also consider the qualification process. As a private lender, SoFi’s eligibility criteria is more stringent than the education department’s.

When you apply for SoFi parent loans, SoFi reviews your credit history, income and other debts. Although it doesn’t advertise a strict minimum, you’ll likely need a decent credit score and steady income to qualify for your best rates.

Parent PLUS loans, on the other hand, only state that you can’t have an adverse credit history. In other words, you can’t have derogatory marks on your credit report, such as unpaid debts or loan defaults. If you do, you could still qualify by applying with a creditworthy endorser.

Although it might be harder to qualify for a SoFi parent loan, the application process itself is easy. As an innovator in the online lending space, SoFi lives up to its reputation with a user-friendly website.

It’s easy to get a rate quote, and filling out a full application is painless as well. That’s not to say applying for a parent PLUS loan is difficult, but the process can vary depending on where your child goes to college.

Shop around to find the right parent loan for you

For college students, federal student loans typically have better terms than private ones. But when it comes to parent borrowing, this isn’t necessarily the case.

Because parent PLUS loans come with origination fees, they might cost you more than a private student loan, such as SoFi student loans for parents.

But be mindful that private student loans aren’t as flexible if you run into economic hardship. If you’re worried about repayment, a parent PLUS loan could be a safer bet.

Besides learning about the different terms and conditions, use a student loan repayment calculator to estimate the long-term costs of borrowing.

That way, you’ll have a clear sense of the costs of borrowing — and you’ll be armed with a foolproof plan for paying back your debt.

Need a student loan?

Here are our top student loan lenders of 2022!
LenderVariable APREligibility 
0.94% – 12.99%1Undergraduate

Visit College Ave

2.00% – 12.35%*,2Undergraduate

Visit SallieMae

0.94% – 11.44%3Undergraduate

Visit Earnest

0.98% – 11.90%4Undergraduate

Visit Ascent

1.69% – 11.98%5Undergraduate

Visit SoFi

1.86% – 9.39%6Undergraduate



Visit FundingU

0.00% – 23.00%8Undergraduate

Visit Edly

* 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.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community 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.

Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a first year graduate student borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 7/1/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.49% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.19% APR to 10.14% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada.

4 Important Disclosures for Ascent.

Ascent Disclosures

Ascent loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit:

Rates are effective as of 07/01/2022 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes income-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit:

1% Cash Back Graduation Reward subject to terms and conditions, please visit Cosigned Credit-Based Loan student borrowers must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs are available for the most creditworthy applicants and may require a cosigner.

5 Important Disclosures for SoFi.

Sofi Disclosures

UNDERGRADUATE LOANS: Fixed rates from 3.75% to 13.30% annual percentage rate (“APR”) (with autopay), variable rates from 1.89% to 11.98 % APR (with autopay). GRADUATE LOANS: Fixed rates from 4.75% to 13.30% APR (with autopay), variable rates from 2.59% to 11.98% APR (with autopay). PARENT LOANS: Fixed rates from 4.48% to 13.55% APR (with autopay), variable rates from 1.69% to 11.98% APR (with autopay). For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. 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. Information current as of 06/17/2022.

6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of July 1, 2022, the 30-day average SOFR index is 1.02%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
  • Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
  • Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

7 Important Disclosures for Funding U.

Funding U Disclosures

Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.

8 Important Disclosures for Edly.

Edly Disclosures

1. Loan Example:

  • Loans from $5,000 – $20,000
  • Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan.
    • Payments deferred for the first 12 months during final year of education.
    • After which, $270 Monthly payment for 12 months.
    • Then $379 Monthly payment for 44 months.
    • Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan.

About this example

The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment.

2. Edly Student IBR Loans are unsecured personal student loans issued by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply.