Private Student Loans for Parents: Comparing 4 Options

 September 17, 2019
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If you’re trying to navigate student loans for parents to help your child pay for college, you might be in for a rude awakening.

The cost of college has skyrocketed. Tuition for in-state students at a four-year public college costs an average of $10,230, but that jumps to $26,290 for out-of-state students.

If you need to borrow money to pay for your kid’s college, a parent PLUS loan can be a great option. With the ability to consolidate your loans to get access to income-driven repayment plans and Public Service Loan Forgiveness, you’ll have a lot of flexibility.

But some private parent student loan companies offer lower interest rates than those you’ll find for parent PLUS loans. Plus, you might be able to escape the latter’s 4.248% origination fee (it drops to 4.236% for loans disbursed on or after October 1).

We’ll take a look at some private student loan companies that have offerings for parents.

1. SoFi parent loan
2. College Ave parent loan
3. Sallie Mae Parent Loan
4. Citizens Bank parent loan

4 of our favorite student loan companies for parents

As you compare the following private student loans for parents, consider the interest rates, fees and other terms and features to determine which option is best for you.

Keep in mind: A search for the best private student loans for bad credit will typically prove futile. You most likely need a decent credit score or a cosigner to qualify.

Lender Variable APRs Fixed APRs Repayment Terms Notes
SoFi 1.99%– 5.52% 2.49%– 5.97% 5-15 years Allows interest-only payments while your child is in school
College Ave 1.04%– 11.98% 3.34% – 12.99% 5-15 years Allows up to $2,500 of loan to cover other educational expenses
Sallie Mae 3.37% – 12.99% 5.49% – 13.87% 10 years Doesn’t allow you to prequalify with a soft credit check
Citizens Bank 1.99% – 6.13% 2.44% – 6.38% 5 or 10 years Offers an extra 0.25 percentage point interest rate reduction if you have an eligible Citizens Bank account

1. SoFi parent loan

SoFi is one of the largest student loan refinancing companies in the industry, but it also offers private student loans.

Interest rates and fees

You can choose between a variable and fixed APR:

  • Variable: 1.99%– 5.52%
  • Fixed: 2.49%– 5.97%

These rates include a 0.25% reduction, which you qualify for when you set up autopay. Also, you can get an idea of what kind of rate you’d qualify for without a hard credit check, so your credit score won’t be affected.

SoFi doesn’t charge application or origination fees, and there are no prepayment penalties.

Other terms and features

You can borrow as little as $5,000 (the minimum may be higher in some states) or enough to cover the cost of attendance for your child. Parents can make interest-only payments while their child is still in school.

You can choose a repayment term of five, 10 or 15 years.

2. College Ave parent loan

If you want a little more flexibility with your payments, College Ave offers three repayment plans from which you can choose:

  • Interest-only payment: Pay just the interest charges while your child is in school
  • Interest-plus payment: Pay enough to cover the interest charges, and then you can set your own monthly payment (in $20 increments)
  • Full principal and interest payment: Start making full payments right away

Interest rates and fees

Although they aren’t as low as SoFi’s rates, College Ave’s APRs are competitive. You can choose between a variable and fixed APR:

  • Variable: 1.04%– 11.98%
  • Fixed: 3.34% – 12.99%

These rates include a 0.25% interest rate reduction for setting up autopay. You can get prequalified for an interest rate through College Ave’s website with a soft credit check.

There are no application or origination fees or prepayment penalties.

Other terms and features

College Ave parent loans start at $1,000 and can cover up to 100% of the school’s cost of attendance. It also can send you up to $2,500 directly to cover other educational expenses, such as books and electronics.

You can choose from 11 repayment terms between five and 15 years. This allows you more flexibility than what many student loan companies offer.

However, if you can qualify for a lower interest rate elsewhere, it might be worth giving up some repayment flexibility.

3. Sallie Mae Parent Loan

Just like College Ave, Sallie Mae offers loans for parents as low as $1,000 and up to your child’s school-certified cost of attendance. Sallie Mae allows you to choose between an interest-only payment while your child is in school or a full payment from the get-go.

Interest rates and fees

Sallie Mae offers both variable and fixed APRs. You might qualify for a rate within the following ranges:

  • Variable: 3.37% – 12.99%
  • Fixed: 5.49% – 13.87%

The lender offers a 0.25 percentage point interest rate reduction when you set up autopay. Like the other lenders listed, Sallie Mae doesn’t charge an application or origination fee and won’t penalize you for paying off your loan early.

Other terms and features

One drawback to the Sallie Mae Parent Loan is that it doesn’t allow you to prequalify with a soft credit check. That means you have to apply to see if you’re approved and find out the rate for which you could qualify. If you’re concerned about inquiries on your credit report, Sallie Mae might not be a great fit.

You also have only one choice for your repayment period: 10 years. Of course, you can pay off the loan earlier if you wish, but you have less flexibility when determining your monthly payment.

4. Citizens Bank parent loan

If you’re already a Citizens Bank customer, applying for its student loan for parents could score you a lower interest rate.

Besides its 0.25 percentage point interest rate reduction for signing up for autopay, the bank offers an extra 0.25 percentage point discount if you have a qualifying account when you apply for the loan.

Interest rates and fees

  • Variable: 1.99% – 6.13%
  • Fixed: 2.44% – 6.38%

Citizens Bank’s rates include the 0.50 percentage point reduction for the loyalty and autopay discounts.

The bank doesn’t charge application or origination fees, and there are no prepayment penalties.

Other terms and features

You can choose a five- or 10-year repayment plan. You can pay interest only while your child is in school or start making full payments immediately.

Also, like Sallie Mae, Citizens Bank doesn’t allow you to see your potential offer until you officially apply. That can make it harder to shop around.

Which private student loans for parents are best?

When looking at private student loan companies that offer parent loans, there’s no one best lender. Each lender has different features and criteria for determining your loan terms. While one might offer lower interest rates, that doesn’t mean you’ll qualify.

To make sure you get a great deal on your parent loans for college, shop around and compare different companies and what they have to offer. For companies that offer prequalification, get an idea of the interest rates for which you’d qualify. As you do this with several companies, you’ll have a better idea of which loan is a good fit for you.

Sarah Li Cain contributed to this report

Need a student loan?

Here are our top student loan lenders of 2021!
LenderVariable APREligibility 
0.94% – 11.98%1Undergraduate
Graduate

Visit College Ave

1.13% – 11.23%*,2Undergraduate
Graduate

Visit SallieMae

0.99% – 11.44%3Undergraduate
Graduate

Visit Earnest

1.50% – 11.33%4Undergraduate
Graduate

Visit Ascent

0.95% – 11.18%5Undergraduate
Graduate

Visit SoFi

1.03% – 11.01%6Undergraduate
Graduate

VISIT CITIZENS

N/A7Undergraduate
Graduate

Visit FundingU

* 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 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.

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 11/24/2021. 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

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


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: AscentFunding.com/Ts&Cs.

Rates are effective as of 10/01/2021 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: AscentFunding.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions, please visit AscentFunding.com/Cashback. 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 2.99% to 10.66% annual percentage rate (“APR”) (with autopay), variable rates from 0.95% to 11.18% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.08% to 10.90% APR (with autopay), variable rates from 1.00% to 11.29% APR (with autopay). PARENT LOANS: Fixed rates from 4.23% to 10.66% APR (with autopay), variable rates from 1.15% to 11.18% 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 11/01/2021. Enrolling in autopay is not required to receive a loan from SoFi. Loans originated by SoFi Lending Corp. or an affiliate (dba SoFi), licensed by the Department of Financial Protection and Innovation under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 1.03% – 11.01% (1.03% – 10.24% APR). Fixed interest rates range  from 3.23% – 11.70% (3.23% – 10.83% APR).

Graduate Rate Disclosure: Variable interest rates range from 1.89% – 10.66% (1.89% – 10.41% APR). Fixed interest rates range from 4.64% – 11.23% (4.64% – 10.95% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.89% – 9.22% (1.89% – 8.50% APR). Fixed interest rates range from 4.24% – 9.74% (4.24% – 9.02% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.89% – 8.02% (1.89% – 7.72% APR). Fixed interest rates range  from 4.18% – 8.54% (4.18% – 8.24% APR).

Parent Loan Rate Disclosure: Variable interest rates range from 1.97%-7.06% (1.97%-7.06% APR). Fixed interest rates range from 4.55%-7.58% (4.55%-7.58% APR).

Bar Study Rate Disclosure: Variable interest rates range from 4.44% – 9.58% (4.44% – 9.52% APR). Fixed interest rates range  from 7.39% – 12.94% (7.39% – 12.82% APR).

Medical Residency Rate Disclosure: Variable interest rates range from 3.53% – 7.03% (3.53% – 6.75% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).

Variable Rate Disclosure: Variable Rates advertised are 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 November 1, 2021, the one-month LIBOR rate is 0.09%.  Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will  vary based on applicable terms, level of degree and presence of a co-signer. Your final variable rate may  be based upon the 30-day average SOFR index, as published by the Federal Reserve Bank of New York.  The maximum variable rate is the greater of 21.00% or 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.

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.  Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, 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. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website 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.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

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.

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.


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.