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.
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||2.81%– 8.01%||4.25%– 8.15%||5-15 years||Allows interest-only payments while your child is in school|
|College Ave||2.09%– 10.25%||4.64% – 12.01%||5-15 years||Allows up to $2,500 of loan to cover other educational expenses|
|Sallie Mae||4.25% – 10.87%||5.49% – 12.87%||10 years||Doesn’t allow you to prequalify with a soft credit check|
|Citizens Bank||2.72% – 7.07%||3.79% – 7.32%||5 or 10 years||Offers an extra 0.25 percentage point interest rate reduction if you have an eligible Citizens Bank account|
Interest rates and fees
You can choose between a variable and fixed APR:
- Variable: 2.81%– 8.01%
- Fixed: 4.25%– 8.15%
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.
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: 2.09%– 10.25%
- Fixed: 4.64% – 12.01%
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.
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: 4.25% – 10.87%
- Fixed: 5.49% – 12.87%
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.
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: 2.72% – 7.07%
- Fixed: 3.79% – 7.32%
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 2020!
|* 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 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
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.
(1)All rates shown include the auto-pay 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.
(2)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.
(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 4/1/2020. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
4 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).
5 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 applicant’s ability to supply the necessary information for submission.
5 Important Disclosures for Citizens.
Undergraduate Rate Disclosure: Variable 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 March 1, 2020, the one-month LIBOR rate is 1.62%. Variable interest rates range from 2.72% – 10.98% (2.72% – 10.83% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.72% – 12.19% (4.72% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school 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. 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 One 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 the loan.
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 http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensone.com/EdRefinance, 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.
Citizens One Student Loan Eligibility: Borrowers must be enrolled at least half-time in a degree-granting program at an eligible institution. Borrowers must be a U.S. citizen or permanent resident or an international borrower/eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For borrowers who have not attained the age of majority in their state of residence, a co-signer is required. Citizens One reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Citizens One Student Loans private student loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens One Student Loans-participating school.
Please Note: International Students are not eligible for the multi-year approval feature.
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.
|2.75% – 10.65%*,1||Undergraduate and Graduate|
|2.69% – 10.97%2||Undergraduate, Graduate, and Parents|
|2.80% – 11.37%3||Undergraduate and Graduate|
|3.52% – 9.50%4||Undergraduate and Graduate|
|5.20% – 14.18%5||Undergraduate and Graduate|
|2.72% – 10.98%6||Undergraduate and Graduate|