A clear guide for families comparing federal Parent PLUS loans and private student loans to cover the cost of college
As high school seniors finalize their college decisions, many parents are left asking the same question:
How are we going to pay for this?
After grants, scholarships, and Federal Direct Student Loans are applied, there is almost always a gap. For most families, loans become part of the equation.
As a college financial aid advisor with over 15 years of experience, I’ve helped families from all financial backgrounds navigate this decision. The good news is that there are options—and understanding the differences can help you choose what’s best for your family.
Parent PLUS Loans vs. Private Student Loans
The two most common ways families cover the remaining cost of college are:
- Federal Parent PLUS Loans
- Private Student Loans
Each has advantages and drawbacks depending on your financial situation.
Federal Parent PLUS Loan
The Federal Parent PLUS Loan (PPL) is often the first option families consider. It is a federal loan designed specifically for parents of undergraduate students and is used to supplement the student’s Federal Direct Loans.
Key Features of Parent PLUS Loans
- Loan is in the parent’s name
Parents apply through studentaid.gov using their FSA ID - Credit-based approval
Designed for families with less-than-perfect credit (approval is not based on income or debt-to-income ratio) - Fixed interest rate
Set each May annually
→ Example: 8.94% for the 2025–2026 academic year - Unsubsidized loan
Interest begins accruing immediately - Flexible repayment options
- Payments can be deferred while the student is in school
- Interest continues to accrue during deferment
- Federal protections and benefits
- Eligible for forbearance
- May qualify for Public Service Loan Forgiveness (PSLF), if requirements are met
- Discharge protections
Loan is discharged if:- The parent borrower passes away
- The student passes away
- Annual borrowing limits (starting 2026–2027)
- $20,000 per academic year
- $65,000 total per student
- (Families already using Parent PLUS Loans prior to this change will be grandfathered under previous rules.)
- Must reapply each year
- Parent PLUS Loans can not be used for graduate students
Private Student Loans
Private student loans are offered by:
- Banks
- Credit unions
- State-based programs
- Private lenders (e.g., Sallie Mae, College Ave) Continued…
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Parent PLUS Loans vs. Private Student Loans: How to Choose the Best Option for College