Complete Guide to Parent Loans
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By Kristen Kuchar

June 10, 2020

Parent loans are available to parents of dependent college-bound children. Some parents choose to borrow loans to help their children pay for college. 

Here’s what you need to know about borrowing parent loans for college: 

Before You Borrow

Before you borrow, be sure that you and your children have exhausted all other resources first. This includes applying for scholarships, filing out the Free Application for Federal Student Aid (FAFSA) to qualify for grants, and pursuing any out-of-the-box ideas, such as employer-paid tuition assistance programs. 

Parent Loan Basics 

It’s important to understand how parent loans work before borrowing. All parent loans need to be repaid by the parent, plus interest. Parent loan debt and student loans cosigned by the parent will impact your debt-to-income ratio, making it more difficult to get approved for a mortgage or other credit. Understand how borrowing parent loans will impact your financial future and your retirement. 

Loan Comparison Calculator: This loan comparison calculator lets you compare two or more different loans, identifying which loan offers a lower monthly payment and which one offers a lower total cost.

Loan Calculator: Use this loan calculator to determine the monthly loan payment and total payments on your student loans, auto loans and mortgages, based on the loan amount, interest rate, loan fees and repayment term.

Federal Parent Loans

Federal Parent PLUS loans are available to parents of dependent undergraduate college students. Federal loans are offered by the U.S. federal government. These loans have a fixed interest rate, meaning it will remain the same for the life of the loan. 

Parents can borrow up to the entire cost of attendance minus other financial aid. Payment is due right away, but there is an option to defer payments while your child is enrolled at least half-time in school and for 6 months afterward. 

Federal Parent PLUS loans do require a credit check to ensure a borrower doesn’t have an adverse credit history, such as a bankruptcy or foreclosure.

Private Parent Loans

Private parent loans are offered by banks, credit unions, state loan agencies and other lenders. Each private parent loan offers different interest rates and different loan terms. Most private lenders offer both fixed and variable interest rate options. Fixed rates stay the same but variable rates can increase. 

Private parent loans require good credit and a minimum income. 

Repaying Parent Loans

How you repay your parent loans depends on if you borrowed federal or private student loans. 

A good place to start:

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