Compare: Student Loan Options | Parent PLUS vs. Private Student Loans
Having a hard time understanding the benefits and disadvantages between Parent PLUS and Private Student Loans? This quick guide summarizes the most important factors to consider when choosing between the two.
Juno Team
May 22, 2025
Where does the money come from?
Parent PLUS
The money comes from the federal government.
Private Student Loans
The money comes from banks, credit unions, and other lenders.
How much can I borrow?
Parent PLUS
The maximum loan amount is based on the Cost of Attendance (COA) for your student's university and degree program - you can borrow up to the COA minus other aid, like Direct Loans, scholarships, and grants.
Private Student Loans
Same as Parent PLUS. Some lenders have a minimum loan amount of $1,000.
What is the interest rate?
Parent PLUS
The interest rate for PLUS Loans taken between 7/1/2025 and 7/1/2026 is 8.94% Fixed.
Private Student Loans
Varies based on credit score. Some borrowers may qualify for rates lower than Parent PLUS.
Is there an origination fee?
Parent PLUS
Yes, an origination fee of 4.228%.
Private Student Loans
Typically no.
How long will I make payments?
Parent PLUS
The standard and graduated repayment plans for PLUS Loans are 10 year terms - if you select an extended repayment plan, you will make payments for up to 25 years.
Private Student Loans
Most private student loan providers offer 5, 7, 10, and 15 year loan terms, with lower rates for shorter terms. A few lenders also offer 20 year terms.
When should I apply?
Parent PLUS
You must complete FAFSA. Your school will let you know if you are eligible for a Parent PLUS loan. You will complete one Master Promissory Note then request the amount you need each year - you can also request by semester if you only need to cover one or the other.
Private Student Loans
Apply before August if you need funds for Fall semester. You will apply for a new loan each year, and you can apply with different lenders to find the best terms - you will also be able to apply by semester if you prefer.
What are my payment options?
Parent PLUS
PLUS Loans offer two repayment plans:
- Option to start making payments immediately
- Defer principal and interest payments until 6 months after the student graduates.
You can still make payments while the loan is deferred to bring down the accumulated interest.
Private Student Loans
You may see a few different repayment plans:
- Fully Defer payments until either 6 or 9 months after the student graduates
- $25 fixed monthly payments while student is in school and full payments 6 to 9 months after graduation
- Pay interest only during school
- Make full principal and interest payments while the student is in school.
There are no prepayment penalties regardless of the plan you choose.
Who is eligible to apply?
Parent PLUS
There is no minimum credit score for the parent - recent bankruptcy may limit eligibility, but there may be options for parents with adverse credit history.
Private Student Loans
The student doesn't need a credit score - the cosigner should typically have a minimum FICO score of 650 with no past due student loans or recent collections. Other eligibility criteria may apply.
What if I face financial hardship?
Parent PLUS
Parent PLUS Loans are eligible for the Income-Contingent Repayment plan based on the parent's income - there may be economic forbearance options, as well.
Private Student Loans
Private student loan providers do not offer income-driven payments - they may offer hardship programs with deferred payments for a limited time period.
What happens in the case of death or disability?
Parent PLUS
If either the primary borrower (the parent) or the student the loan is for dies, Parent PLUS Loans are discharged - they can be discharged for permanent disability of the parent, but typically not if the student becomes permanently disabled.
Private Student Loans
Many private student loans include death and disability discharge clauses - if the student dies, the debt is usually canceled for the cosigner, and if the cosigner dies the debt will typically revert to the primary borrower (student).
Sources
Written By
Juno Team
Juno came into existence to help students save money on student loans and other financial products through group buying power by negotiating with lenders. The Juno Team has worked with 200,000+ students and families to help them save money.
