9 Best Parent Loans For College: Parent PLUS and Private
Types of student loans for parents
There are two types of loans available to parents: Federal Direct PLUS Loans and Private Student Loans.
Federal direct loans PLUS are government loans that parents can take out to help pay for a child’s college education. They have higher interest rates and fees, and are eligible for fewer repayment plans than federal subsidized and unsubsidized loans for students.
The interest rate for Federal Direct PLUS loans is 5.30% for 2020-2021. There is also a 4.228% origination fee, which is deducted from each loan disbursement.
Assuming your child has exhausted federal student loan options and your finances are healthy, consider a Parent PLUS loan if:
You work for the government or a 501 (c) (3) nonprofit and want to pursue public service loan forgiveness.
Your credit is not strong enough to qualify for a lower rate with a private parent loan.
How to get a student loan for parents
You can apply for a private parent student loan directly from the lender.
Before applying for a private parental loan, shop around to find the the lowest interest rate on student loans you are eligible. Some lenders have a prequalification process that allows you to see a personalized rate before the lender makes a hard credit draw.
Who pays a student loan to parents?
Before taking out a student loan for parents, make sure that you and your child have clear repayment plans. The loan will ultimately be your responsibility to repay. The only way to transfer parent loans it’s having your child refinance the loan in his name.