4 Top Student Loan Companies for Budget-Conscious Parents

student loan companies

As tuition costs keep rising, parents of college-bound kids are taking out more student loans than ever before.

According to the College Board’s Trends in Student Aid report, federal Parent PLUS Loan borrowing increased by 31 percent between 2006 and 2016.

Private student loan companies are also lending to parents, and several actually beat the rates and fees of the federal government.

Before choosing a student loans company for your child’s education, make sure to shop around for the best terms. To help you get started, we’ve compiled our recommendations for the best student loan companies for parents. Here are the top four.

1. Citizens Bank

Citizens Bank offers a competitive alternative to federal Parent PLUS Loans. In fact, the bank suggests parents save an average of $643 with its loan as compared to its federal counterpart.

To be eligible, you must be a U.S. citizen or qualifying resident with a Social Security number. You must also have a child enrolled at least half time in a degree-granting program.

Here’s what you can expect if you choose to borrow with Citizens Bank:

  • Fixed interest rates between 5.25% - 11.99%
  • No application or origination fees
  • No penalty for prepayment
  • 0.25 percent interest rate discount for setting up autopay
  • 0.25 percent interest rate discount if you also bank with Citizens Bank
  • Borrow up to $90,000 for an undergraduate program, up to $110,000 for a graduate program, up to $180,000 for business and law school, and up to $295,000 for a healthcare education
  • Choice of a five- or 10-year repayment term
  • Option of immediate repayment or interest-only repayment

It’s easy to apply online with Citizens Bank. If you qualify, the bank will disburse the funds directly to your school of choice. Note that you can only apply for one academic year at a time. If you need more funds in the following year, you’ll have to submit a new application.

Although Citizens Bank has competitive interest rates, the lender does have one drawback: You can’t get an instant rate quote to see if you qualify. You’d need to submit a full application — and consent to a hard credit check — before seeing your offers.

This requirement makes it a bit harder to comparison shop different lenders. But it could be worth the application if you already bank with the lender or aren’t worried about submitting to a credit check.

2. SoFi

SoFi also makes the list of top student loan companies, since its parent loan could be a cheaper alternative to a federal Parent PLUS Loan. By SoFi’s calculations, its borrowers save an average $3,637 on a SoFi loan compared to a federal one.

You can only take out a SoFi Parent Loan if your child is enrolled full time at an eligible school. You can apply on your own or with another parent as the cosigner. If you’re approved, you can expect these terms and conditions:

  • Variable rates from 2.58% - 7.07% and fixed rates from 3.25% - 7.25%
  • No application or origination fees
  • No penalty for prepayment
  • 0.25 percent interest rate discount for autopay
  • 0.125 percent interest rate discount on a new loan for being an existing SoFi member
  • Borrow between $5,000 and the total cost of attendance
  • Terms of five or 10 years
  • Start repayment between 30 and 45 days after the loan is disbursed
  • Access to licensed wealth advisors who can help you with financial planning

Like Citizens Bank, SoFi offers parent loans for one academic year at a time. Unlike Citizens Bank, though, SoFi lets you apply online for an instant rate quote. This soft credit check won’t affect your credit score, and it shows if you pre-qualify for loan offers.

Of course, these offers aren’t final. But they do offer a good sense of what rates and terms you could get if you borrow with SoFi.

3. College Ave

College Ave might not offer the lowest rates on the market, but it does have some of the most flexible repayment options. You have some alternatives to immediate repayment in case you need some breathing room.

Plus, College Ave doesn’t have to send the entire loan directly to the school. You can request up to $2,500 in your bank account to pay for educational expenses like books or supplies.

Here are the other unique features of a College Ave parent loan:

  • Variable rates from 3.92% - 11.52% and fixed rates from 6.07% - 12.66%
  • No application or origination fees
  • No penalty for prepayment
  • 0.25 percent discount on your interest rate for autopay
  • Borrow from $2,000 up to the total cost of attendance
  • Flexible repayment terms between five and 12 years
  • Choice of repayment terms. You can start making payments right away, or choose a lower monthly payment — plus interest — while your child is in school. Or, make interest-only payments until your child graduates

Like SoFi, College Ave lets you apply for an online rate quote. After providing a few basic pieces of information, you can see preliminary offers. This lets you compare your SoFi and College Ave offers without any impact on your credit score.

That being said, it might be tough to qualify for a College Ave loan. Although the lender doesn’t advertise a strict cutoff, it says its loans are available to people with “strong credit.”

If you don’t qualify, you may consider a Parent PLUS Loan, which has more relaxed credit requirements. Keep in mind, it comes with a 7.00% interest rate and 4.264 percent origination fee.

4. Sallie Mae

Sallie Mae also offers student loans with competitive rates for parents. Although you can’t defer payments until your child graduates, you do have the option of making interest-only payments for up to two years.

Here’s some more info about Sallie Mae loans:

  • Variable rates from 3.62% - 10.54% and fixed rates from 5.74% - 11.85%
  • No application or origination fees
  • No penalty for prepayment
  • 0.25 percent interest rate discount for setting up autopay
  • Borrow from $1,000 up to the total cost of attendance
  • Choose between immediate repayment or interest-only payments for up to 48 months

As with Citizens Bank, you’ll need to submit a full application and undergo a credit check before seeing your student loan offers from Sallie Mae.

Shop around for the best student loan companies

Citizens Bank, College Ave, SoFi, and Sallie Mae offer parent student loans with competitive rates and easy application processes. But each has its pros and cons, and the right student loans company depends on your unique situation.

If you’re looking for flexible repayment options, for instance, College Ave could be the best choice. But if finding the lowest interest rate is your priority, you might be better off with SoFi.

Figure out what you’re looking for, and compare the top student loan companies to find one that meets your specific needs. By doing your due diligence, you can find the right student loan to help your child pay for college.

Need a student loan?

Here are our top student loan lenders of 2018!
LenderRates (APR)Eligibility 

1 = Citizens Disclaimer.

2 = CollegeAve Autopay Disclaimer: 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.

* 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.

3 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3.92% -
Undergraduate, Graduate, and ParentsVisit CollegeAve
3.62% - 11.85%*3Undergraduate and GraduateVisit SallieMae
2.93% -
Undergraduate, Graduate, and ParentsVisit CommonBond
3.46% -
Undergraduate, Graduate, and ParentsVisit Citizens
4.21% - 9.69%Undergraduate and GraduateVisit LendKey
3.35% - 10.89%Undergraduate and GraduateVisit Connext
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