July 5, 2022

Best Parent Student Loans | Find the Best Loan for You | US News

As a parent, it’s natural to want to do anything you can to help your child. So it’s no surprise that some 3.6 million parents had outstanding loans through the federal student loan program at the end of 2019, according to a study by Trellis Research. If you’re considering helping your child by taking out parent student loans, here’s what you should know.

The Best Parent Student Loans for College in 2021

Earnest

3.34% to 12.78% with autopay Fixed APR
No maximum Max. Loan Amount
650 Min. Credit Score

College Ave

3.34% to 12.99% with autopay Fixed APR
No maximum Max. Loan Amount
Not disclosed Min. Credit Score

Sallie Mae

4.25% to 12.59% * Fixed APR
Not disclosed Max. Loan Amount
Mid 600s Min. Credit Score

Discover

4.24% to 12.99% with autopay Fixed APR
No maximum Max. Loan Amount
Not disclosed Min. Credit Score

Splash Financial

2.54% to 6.25% with autopay Fixed APR
No maximum Max. Loan Amount
650 Min. Credit Score

Laurel Road

2.80% to 6.00% with autopay Fixed APR
No maximum Max. Loan Amount
650 Min. Credit Score

RISLA

As low as 3.99% with autopay Fixed APR
$45,000 yearly Max. Loan Amount
Not disclosed Min. Credit Score

SoFi

4.23% to 10.66% with autopay Fixed APR
No maximum Max. Loan Amount
Not disclosed Min. Credit Score

Citizens Bank

As low as 3.01% with autopay Fixed APR
$150,000 Max. Loan Amount
670 Min. Credit Score

CommonBond

3.74% to 10.74% with autopay Fixed APR
$500,000 Max. Loan Amount
Not disclosed Min. Credit Score

Find the Best Student Loans for You

Best for fair credit

Earnest is an online lender offering private student loans to current college and graduate students and student loan refinancing to graduates. The company was founded in 2013. Borrowers can choose their loan terms to fund up to the full cost of their education.

Before You Apply

  • Loan types: undergraduate, graduate, co-signer, refinancing, Parent PLUS refinancing, MBA, law, medical
  • Minimum FICO credit score: 650
  • Co-signer accepted: yes
  • Better Business Bureau rating: A+

Best Features

  • Earnest doesn’t charge origination, application or late fees.

  • You can choose your monthly payment and loan term length.

  • You can use a co-signer on undergraduate or graduate student loans, and student loan refinancing is available.

See full profile

Best for customer service

Education Loan Finance, also known as ELFI, is a student loan refinancing program offered by SouthEast Bank. Options are available in all 50 states and Puerto Rico to refinance private and federal student loans, including undergraduate, graduate, parent and MBA loans, as well as loans for law, dental and medical school. ELFI also offers private loans for students at eligible institutions.

Before You Apply

  • Loan types: undergraduate, graduate, parent loans, refinancing, parent refinancing, MBA, law, health care
  • Minimum FICO credit score: 680
  • Co-signer accepted: yes
  • Better Business Bureau rating: A+

Best Features

  • There are no application, origination or prepayment fees.

  • All types of student loans are eligible for refinancing.

See full profile

Best for instant approval

College Ave Student Loans offers student loans to borrowers in all 50 states. Undergraduate, graduate and parent loans are available. The lender specializes in simple applications with an instant decision.

Before You Apply

  • Loan types: undergraduate, graduate, parent loans, refinancing, MBA, law, dental, medical, career, international
  • Minimum FICO credit score: undisclosed
  • Co-signer accepted: yes
  • Better Business Bureau rating: A+

Best Features

  • Loans are available from $5,000.

  • Prequalify for a rate in less than 1 minute.

  • Loan terms are available from 5 to 20 years.

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Best for product availability

Sallie Mae is a publicly traded consumer bank that offers private student loans to pay for undergraduate, graduate and specialty degrees. The company started in 1972 as a government entity that serviced federal student loans. It went private in 2004 and has served nearly half a million students and families with its range of student loan products. Beyond student loans, Sallie Mae Bank offers savings products to help families plan and pay for college, and credit cards with incentives for using cash back rewards to pay back student loans.

Before You Apply

  • Loan types: undergraduate, career training, parent, K-12, graduate, MBA, medical, medical residency, dental, dental residency, health professions, law school, bar study
  • Minimum FICO credit score: undisclosed
  • Co-signer accepted: yes
  • Better Business Bureau rating: A+

Best Features

  • Student loans completely cover school-certified expenses such as tuition, fees, books, housing, meals, travel or a laptop.

  • Customer service is 100% U.S.-based.

  • Borrowers don’t have to pay a loan origination fee.

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Best for no fees

Discover Bank has been operating for more than 100 years, and since 2010, it has offered private student loans to students attending more than 2,400 colleges and universities. Loans of up to 100% of education costs with fixed or variable rates are available.

Before You Apply

  • Loan types: undergraduate, graduate, parent, refinancing, MBA, law, international, consolidation, health professions, residency, bar exam. International loans require a co-signer who is a U.S. citizen or permanent resident.
  • Minimum FICO credit score: undisclosed
  • Co-signer accepted: yes
  • Better Business Bureau rating: A+

Best Features

  • Loans as small as $1,000 are available.

  • Discover has no origination, application or late fees.

See full profile

Best for speedy credit decisions

Splash Financial is a student loan refinance lender marketplace based in Cleveland, with its own lender network of banks and credit unions. Splash Financial gives borrowers quotes from its partner lenders with loans available in all 50 states. Refinancing is available for federal, private and Parent PLUS loans. A specialized refinance program is designed for doctors completing residencies or fellowships.

Before You Apply

  • Loan types: refinancing, parent refinancing
  • Minimum FICO credit score: 650
  • Co-signer accepted: yes
  • Better Business Bureau rating: A-

Best Features

  • Refinancing is available for a range of student loans.

  • Splash Financial works with a network of banks and credit unions to provide the best possible rates.

  • There are no application fees, origination fees or prepayment penalties.

See full profile

Best for graduate health care program loans.

Laurel Road, which became part of KeyBank in 2019, offers graduate student loans and refinancing on a variety of student loans.

Before You Apply

  • Loan types: student loan refinancing, health care graduate, Parent PLUS refinancing
  • Minimum FICO credit score: 650
  • Co-signer accepted: yes
  • Better Business Bureau rating: A

Best Features

  • Loans are available from $5,000 up to 100% of the student’s school-certified cost of attendance.

  • Borrowers can make full payments while in school, or choose to pay interest only, a flat fee or defer payments.

  • Laurel Road student loans have no application, origination or prepayment fees.

See full profile

Best for fixed APR

The Rhode Island Student Loan Authority is a nonprofit quasi-state authority that provides college financing to students and parents. The lender specializes in providing loans to Rhode Island residents and students, though not all loans have residency requirements.

Before You Apply

  • Loan types: undergraduate, graduate, refinance, parent
  • Minimum FICO credit score: undisclosed
  • Co-signer accepted: yes
  • Better Business Bureau rating: unrated

Best Features

  • Students may be enrolled at least half-time and still qualify.

  • There is no prepayment fee, so borrowers may pay off their loans early.

  • Rewards are available for interns and nurses.

See full profile

Best for multiple repayment options and no fees

SoFi is an online lender offering student loan refinancing, undergraduate, graduate and parent loans in all 50 states. The lender has served more than 375,000 borrowers with $30 billion in refinanced student loans. Although SoFi focused on refinancing in its early years, the company has expanded to also offer its own undergraduate, graduate and parent loans.

Before You Apply

  • Loan types: undergraduate, graduate, parent loans, refinancing, parent refinancing, MBA, law, dental, medical
  • Minimum FICO credit score: undisclosed
  • Co-signer accepted: yes
  • Better Business Bureau rating: A+

Best Features

  • All types of student loans are eligible for refinancing.

  • SoFi’s lending process is completely online.

  • Loan terms are available from five to 20 years.

See full profile

Best for streamlined approval process

Citizens Bank was founded in the late 1800s in Rhode Island. Today, it’s one of the largest commercial banks in the U.S. with a presence in 11 states. Branches are concentrated in the New England, Mid-Atlantic and Midwest regions.

Before You Apply

  • Loan types: undergraduate, graduate, parent loans, refinancing, parent refinancing
  • Minimum FICO credit score: 670
  • Co-signer accepted: yes
  • Better Business Bureau rating: A+

Best Features

  • Citizens Bank offers multiyear approval loans, meaning that once you get started, you will continue to secure funding for subsequent years in school without needing to go through a credit check every year.

  • Borrowers who are Citizens Bank customers who sign up for auto payments can reduce their interest rates by 0.5%.

  • International students can apply if they have a co-signer who is a U.S. citizen or permanent resident with good credit.

See full profile

What Is a Parent Student Loan?

A parent student loan is a type of federal or private student loan that’s designed specifically for parents who are helping a child pay for school.

These loans tend to have higher interest rates and fees than undergraduate student loans. However, parent loans can also come with higher limits, which could come in handy if your child is attending an expensive school and needs more financial aid than the Department of Education offers.

When it comes to how parent student loan funds can be used, they’re generally no different from what a student can do with a traditional student loan.

What Are the Different Types of Parent Student Loans?

There are two types of student loans that parents can choose from: Parent PLUS Loans and private parent student loans.

Parent PLUS Loans

The Direct PLUS Loan program is a federal student loan program and includes Parent PLUS Loans. Only biological or adoptive parents are eligible to apply for a Parent PLUS Loan, so it’s not an option if you’re a grandparent or other guardian. Additionally, Parent PLUS Loans are only usable for undergraduate educational costs, so they aren’t an option to help a child get through graduate school.

When you apply for a Parent PLUS Loan, which you’ll do by filling out the Free Application for Federal Student Aid, or FAFSA, the Department of Education will run a credit check to ensure you don’t have any adverse credit items on your reports. Examples include significant delinquencies and collection accounts or a recent foreclosure, bankruptcy or repossession.

Parent PLUS Loans come with the highest interest rates of all federal student loans, but they’re standardized, so everyone who qualifies gets the same rate. Borrowers are limited to just one of the federal program’s four available income-driven repayment plans – the Income-Contingent Repayment Plan.

Private Parent Student Loans

These loans are offered by private lenders outside of the federal student loan program. As a result, they don’t qualify for federal benefits.

When you submit an application for a private parent student loan, the lender will run a credit check to determine your creditworthiness. Your approval, as well as the terms of the loan, are dependent on your credit history, income and other factors.

Interest rates can vary from lender to lender, as well as from borrower to borrower. One benefit of private parent student loans is companies typically don’t charge an upfront loan fee as the federal government does. Unlike the federal government, private lenders don’t offer income-driven repayment plans.

What to Consider When Choosing a Parent Loan for College

Before you start shopping around for parent loans, it’s important to consider whether borrowing money is the right decision.

“Parents need to think about how the additional parent debt impacts their own financial goals,” says Matthew Carpenter, CEO of College Funding Services. “Will this harm plans for retirement, their daily lifestyle or household budget? What is the likelihood of a return on the investment?”

Also, because parent student loans tend to be more expensive than undergraduate student loans, it may make more sense to have your child apply for student loans, says Travis Hornsby, founder of Student Loan Planner. Then once your student receives the financial aid award letter, you may choose to borrow via parent loans to cover the gap.

If you’re certain you want to apply for parent student loans, follow these steps to help you choose the right option for you and your child:

  • Check your credit score. A high credit score – and a high income – are key to qualifying for the best interest rates private student loan companies have to offer. If you can manage to score a lower interest rate than what the federal government offers, it could save you big time. But if your credit is average, Parent PLUS Loans may give you a better offer.

  • Shop around. If you’re considering private loans, it’s crucial that you take the time to compare rates from several lenders. Remember, different lenders can have different interest rate ranges, and they may also differ in how they underwrite applications. The good news is that you can get prequalified with multiple lenders to get rate quotes and there’s no hard credit check or commitment involved.

  • Think ahead. Even if you can score a lower interest rate on a private loan, it might not be the right fit. “Where private loans may have lower rates overall, they are the least flexible in repayment terms,” says Carpenter. “Federal loans may have higher interest rates – not always – but they offer the most flexibility in repayment terms, which helps to protect the borrower in case of job loss or another unplanned event.”

How to Apply for a Parent Student Loan

If you’re applying for a Parent PLUS Loan, here are the steps you’ll need to take to receive the financing you need:

  • Fill out the FAFSA with your child, with the child’s information as the student and yours as the parent.
  • Fill out a separate application for Parent PLUS Loans after your child has submitted the FAFSA.
  • Make sure you don’t have a freeze in place on any of your credit reports.
  • Sign the promissory note.
  • If there are excess funds beyond what’s paid to the school for tuition and fees, designate whether the school should send the remaining balance to you or your child.

“Be aware that Parent PLUS Loans don’t have a grace period,” says Hornsby. “Repayment starts immediately when you take out the loan. You can always request deferment, but there isn’t a guarantee you will get the loans deferred.”

With private student loans, the process doesn’t require filling out the FAFSA, but it’s still a good idea for students to fill out the form in case they qualify for any other types of federal financial aid.

To apply for a private parent student loan, you’ll need to:

  • Shop around and compare rate quotes from multiple lenders.
  • Choose the best lender for you and submit an application via its website.
  • Provide any documentation required by the lender, such as pay stubs or a government-issued photo ID.
  • Determine how long the repayment term will be.
  • Once the lender returns a final offer, decide whether to accept.
  • If you accept, complete the process by agreeing to the terms and conditions of the contract.

Once you’ve completed the process, the private lender may choose to send the loan funds directly to you or disburse them to your child’s school. You’ll typically start making payments immediately.

Who Is Responsible for the Repayment of a Parent Student Loan?

As the borrower on a parent student loan, you are the only person responsible for repaying it. Even if children agree to take over payments after graduation, they’re not legally obligated to make good on that promise.

By refinancing, it’s possible to transfer parent student loan debt to the child after graduation, says Hornsby. “This is an option that a lot of parents and their children do,” he adds. “You can transfer the loan by having your child refinance it into their name as long as they have good credit history and are able to make the student loan payments.”

Because of the responsibility associated with parent student loans, it’s crucial that you consider how taking one out can impact your financial well-being, both now and in the future.

View More Best Parent Student Loans for College

Best for online preapprovals

Founded in 2012, CommonBond has funded more than $3 billion in student loans. The lender offers undergraduate, graduate, MBA and student loan refinance loans.

Before You Apply

  • Loan types: undergraduate, graduate, refinancing, parent refinancing, MBA, dental, medical, law
  • Minimum FICO credit score: Not disclosed
  • Co-signer accepted: A co-signer is required for the undergraduate and graduate products. No co-signer is required for MBA, dental or medical loans. The lender offers a co-signer release after 24 on-time, consecutive payments. Parent PLUS loans can be refinanced to the child’s name, if they are eligible borrowers.
  • Better Business Bureau rating: B+

Best Features

  • Co-signers are accepted for all loans.

  • Borrowers can make up to full monthly payments while in school or choose to pay interest only, a flat fee or defer payments.

  • Online preapproval is available.

See full profile

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