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 3.24%– 8.03% 3.99%– 8.03% 5-15 years Allows interest-only payments while your child is in school
College Ave 2.49%– 13.90% 3.22% – 13.95% 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 3.69% – 9.09% 4.49% – 9.29% 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: 3.24%– 8.03%
  • Fixed: 3.99%– 8.03%

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: 2.49%– 13.90%
  • Fixed: 3.22% – 13.95%

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: 3.69% – 9.09%
  • Fixed: 4.49% – 9.29%

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 2022!
LenderVariable APREligibility 
2.49% – 13.85%1Undergraduate
Graduate

Visit College Ave

2.55% – 11.44%2Undergraduate
Graduate

Visit Earnest

3.25% – 13.59%3Undergraduate
Graduate

Visit SallieMae

0.00% – 23.00%4Undergraduate
Graduate

Visit Edly

3.25% – 9.69%6Undergraduate
Graduate

VISIT CITIZENS

N/A6Undergraduate
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 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.

  1. As certified by your school and less any other financial aid you might receive. Minimum $1,000.
     
  2. 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.
     
  3. 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.

Information advertised valid as of 9/15/2022. 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 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 3.47% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 2.80% APR to 11.69% 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. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.


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

4 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.


5 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 September 1, 2022, the 30-day average SOFR index is 2.23%. 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.

     

    Undergraduate Rate Disclosure: Variable interest rates range from 3.25%-10.35% (3.25% – 9.69% APR). Fixed interest rates range from 4.24% – 10.59% (4.24% – 9.93% APR). 

    Graduate Rate Disclosure: Variable interest rates range from 3.75%-9.90% (3.75% – 9.68% APR). Fixed interest rates range from  5.22% – 10.14% (5.22% – 9.91% APR). 

    Business/Law Rate Disclosure: Variable interest rates range from 3.75%-9.35% (3.75% – 9.16% APR). Fixed interest rates range from 5.20% – 9.59% (5.20% – 9.39% APR).

    Medical/Dental Rate Disclosure: Variable interest rates range from 3.75%-9.02% (3.75% -8.98% APR). Fixed interest rates range from 5.18% – 9.26% (5.18% – 9.22% APR). 

    Parent Loan Rate Disclosure: Variable interest rates range from 3.25%-9.21% (3.25% – 9.21% APR). Fixed interest rates range from 3.96%-9.50% (3.96%-9.50% APR).

    Bar Study Rate Disclosure: Variable interest rates range from 6.58%-11.72% (6.58% – 11.62% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.82% APR). 

    Medical Residency Rate Disclosure: Variable interest rates range from 5.67%-9.17% (5.67% – 8.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).


6 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.