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Best Private Parent Loans for College

Kathryn Morstad
best private parent loans for college
best private parent loans for college

Having a child in college can be daunting. You have to worry about their education, their safety, and how you’re going to pay for it all.

Typically, that means taking out loans to cover any education costs remaining after scholarships, grants, and college savings or 529 accounts have been exhausted.

When it’s time to consider additional funding, there are essentially two student loan sources available.

The first source is federal loans through the U.S. Department of Education, which administers the financial aid program (often referred to as FAFSA) sponsored by the government. The second source is the private student loan marketplace, where top-tier banks and credit unions offer low-interest loans to parents with good credit and income.

Why Some Parents Need to Pursue Additional Funds Beyond FAFSA

Some parents luck out and their child qualifies for tons of scholarship money, or perhaps even a free ride to their college of choice.

For most parents, there are gaps in funding that can exhaust savings and other sources of funds quickly.

During the 2021-2022 school year, private colleges averaged $43,775 in tuition and fees with out-of-state public school tuition averaging $28,238 and in-state tuition averaging $11,631.

With a four-year program, you can quickly find yourself needing to supplement the cost of education with loans. Let’s walk through the options.

Brief Overview of Parent Federal Loan Options vs Private Student Loans for Parents

As a general rule, you should exhaust federal loan opportunities before pursuing private student loans. However, federal Parent PLUS loans have high interest rates across the board, while parents with excellent credit and income may be able to qualify for lower rates through private lenders.

In the end, your decision may come down to the option with better benefits. Let’s weigh the pros and cons of federal Parent PLUS loans and private parent loans for college.

Federal Direct PLUS Loans for Parents

Direct PLUS Loans for Parents, or Parent PLUS Loans, are available through the Department of Education for schools participating in the Direct Loan program.

You must be the biological, adoptive, or stepparent of the child to qualify. Grandparents and legal guardians are not eligible for Parent PLUS loans unless they have legally adopted the child.

Here are some terms and benefits of Parent PLUS Loans:

  • Congress sets all rates and fees annually — the fixed rate for the 2022-2023 academic year is 7.54%.
  • The maximum allowable amount is the cost of attendance, less any financial assistance received.
  • You can request deferred payments until six months after your child graduates, as long as they attend school at least half-time. Keep in mind that interest will begin to accrue when the funds are disbursed to your child’s school.
  • There will be a credit check, but the rate is set and there is no reduced rate for someone with excellent credit (like with a private lender).
  • There is a 4.228% loan fee for all Parent PLUS Loans.
  • Federal loans have generous repayment plans and the Parent PLUS Loan is no different. You can apply for a standard, graduated, or extended repayment plan as well as Direct Loan Consolidation (your interest rate will remain the average of all loans).
  • There are also generous forbearance and deferment options.

Private Student Loans as an Alternative

In the next section, we’ll do a side-by-side comparison of two private lenders, including a look at pros and cons. Here are a few things that are common to nearly all private lenders:

  • You can easily get quotes from various industry-leading lenders through a student loan marketplace like Purefy. At Purefy, there are no hard credit checks when you discover rates. Only a soft credit pull is obtained, which doesn’t negatively impact your credit score. Once you select a lender and complete their application, you’ll undergo one hard credit pull, which is less problematic than multiple inquiries from different lenders.
  • While most banks do charge fees to create a loan, private student loan lenders generally don’t charge application or origination fees.
  • Most private student loan lenders offer both fixed and variable rate loans.

Where Are the Best Deals for Private Parent Student Loans?

Interest rates are increasing and likely will continue to increase through 2023. However, the private student loan marketplace still has some great rates available.

If you have high income and excellent credit, you may qualify for the lowest interest rates offered by lenders. Just be sure to compare the private student loan perks as well. For instance does the private lender offer forbearance or deferment plans?

What to Compare While Shopping for Private Student Loans for Parents

There are numerous factors to consider while shopping for the best private parent loans for college. In addition to finding the lowest rates, you’ll want to watch out for any fees the lender may charge, look for benefits like autopay discounts or forbearance options, and weigh the other pros and cons of each lender.

Here’s an overview of what to consider when shopping for private student loans for parents.

Low Rates

While the federal Parent PLUS Loan rates for 2022-2023 are fixed at 7.54% regardless of credit history or income level, private parent loans for college range between for fixed rate loans and 0.94% and 12.99% for variable rate loans, among Purefy’s recommended lenders.

With excellent credit and income, you could capture a rate well below the federal level.

No Loan Fees

Unlike a mortgage, private student loan lenders don’t charge origination or application fees. You can get a free rate quote through a marketplace like Purefy with no obligation to move forward with the loan.

The 4 Best Companies for Private Student Loans

Our Top-Rated Picks for 2023 Offer Low Rates and No Fees

earnest-logo

Option to skip a payment once a year

Fixed Rate

4.79% – 13.85% APR 1

Variable Rate

4.79% – 13.50% APR 1
efli-lender

In-school deferment available if you return for another degree

Fixed Rate

3.98% – 11.99% APR 4

Variable Rate

3.98% – 11.99% APR 4

Optional $25 payment plan during school to reduce interest after graduation

Fixed Rate

4.49% – 15.82% APR 2

Variable Rate

4.49% – 15.72% 2

1% Cash Back Graduation Reward program

Fixed Rate

4.62% – 16.16% APR​ 3

Variable Rate

5.74% – 15.76% APR 3

Private Lender Comparison

Let’s compare the terms and eligibility requirements between two top-tier private student loan companies, along with a few pros and cons of their programs.

Earnest

Eligibility Requirements:

  • A minimum credit score of 650
  • Must be a U.S. citizen or permanent resident
  • Must earn at least $35,000 per year
  • Your child must be enrolled at least half-time in a Title IV-qualified four-year college

Terms:

  • Flexible repayment terms available for 5, 7, 10, 12, and 15 years
  • You can borrow between $1,000 and the total cost of attendance

Pros

  • Save 0.25% by signing up for autopay
  • You can opt to skip one payment each year
  • There is a 9-month grace period following your child’s graduation (which is longer than most companies)
  • Forbearance available for up to 12 months
  • No late fees
  • In-house loan servicing with their ‘Client Happiness Team’

Cons

  • No customer service support available on weekends
  • No co-signer release if you opt to cosign a loan with your child — refinancing is necessary to be dropped as a cosigner

College Ave

Eligibility Requirements:

  • A minimum credit score of 660
  • You must make at least $35,000 annually
  • You must be a U.S. citizen or permanent resident
  • Your child has to be enrolled in a Title IV-qualified four-year college at least half-time

Terms:

  • Repayment terms between 5 and 15 years
  • You can borrow between $1,000 and the total cost of attendance

Pros:

  • You can opt to have $2,500 disbursed directly to you
  • Save 0.25% by signing up for autopay
  • Fast application and approval process to disbursement
  • Up to 12 months of forbearance in three-month increments
  • Cosigner release available after 24 payments (should you opt to cosign)
  • International students can qualify with a cosigner who is a U.S. citizen or permanent resident

Cons:

  • No deferring payments or grace period while the child is in school
  • Unclear deferment and forbearance policies
  • Loan servicing/customer service handled by a third party

How Do I Find the Best Private Student Loans for Parents?

As technology grows more sophisticated, it’s no longer necessary to contact each individual bank or credit union and submit a loan application to get a rate quote.

In the past, the legwork was not only time-consuming, it also resulted in multiple hard credit inquiries (which can lower your credit score).

Luckily, things are easier today. Through Purefy’s rate comparison tool, you’ll complete a short form before you are presented with real-time rates for multiple lenders.

From there, you can compare the information to see what offer might work best for your circumstances. There is no cost and no obligation to proceed. Weigh your options and shop around for the best offer but consider the overall loan package (including fees and any potential benefits) before deciding on a parent student loan. 

Need a Private Student Loan? Check Out the Top Lenders of 2023.

Compare interest rates and perks to find the best lender for you.

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Student Loan Refinancing

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Earnest Rate Disclosure

Rates displayed include the 0.25% Auto Pay discount. You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.04% APR to 14.10% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.04% APR to 13.75% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Responsible borrowing tip: Explore all scholarship, grant and federal options before applying for a private loan.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

ELFI Rate Disclosure

Education Loan Finance is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 10-24-2022. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.

College Ave Rate Disclosure

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community 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.
Rates shown include autopay 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.
Minimum loan amount $1,000, as certified by your school and less any other financial aid you might receive.
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.
Information advertised valid as of 02/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

Ascent Rate Disclosure

Ascent Student Loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentStudentLoans.com/Ts&Cs.

Rates are effective as of 02/01/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized back account each month. For Ascent rates and repayment examples please visit: www.AscentStudentLoans.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions. Click here for details.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 6.94% to 11.58% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:


Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.64% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.64% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

Earnest Rate Disclosure

Rates displayed include the 0.25% Auto Pay discount. You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.04% APR to 14.10% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.04% APR to 13.75% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Responsible borrowing tip: Explore all scholarship, grant and federal options before applying for a private loan.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 01/01/2023. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

ELFI Rate Disclosure

Education Loan Finance is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 10-24-2022. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.

College Ave Rate Disclosure

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community 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.
Rates shown include autopay 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.
Minimum loan amount $1,000, as certified by your school and less any other financial aid you might receive.
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.
Information advertised valid as of 02/01/2023. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

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