Updated June 11, 2025
As a parent, you naturally want to help your child as much as possible. That mindset often includes helping them pay for college. If you don’t have enough money tucked away in a 529 or your savings account, you may be considering Parent PLUS loans.
According to federal data, approximately 3.6 million borrowers nationwide have Parent PLUS loans. But these loans are an expensive form of debt. If you’re concerned about high borrowing costs, here’s what to know about Parent PLUS loans and potential alternatives to pay for school.
Reasons to Avoid Parent PLUS Loans
As of 2025, Parent PLUS borrowers have an average outstanding balance of nearly $31,000. A high balance can make it difficult to repay student loans in general, but Parent PLUS loans have some additional drawbacks that further complicate repayment:
- They have high interest rates: While federal loans typically have low interest rates, Parent PLUS loan rates are generally higher than other loan types. Loans issued between July 1, 2024 and July 1, 2025 have an interest rate of 9.08%.
- Parent PLUS Loans have disbursement fees: Along with interest, Parent PLUS Loans also charge disbursement fees. The fee is deducted from the loan amount before it’s issued to you. Loans disbursed on or after October 1, 2021, have a 4.228% disbursement fee.
- They aren’t eligible for income-driven repayment (IDR) plans: Federal student loan borrowers can typically take advantage of IDR plans if they can’t afford their payments. But Parent PLUS loans aren’t eligible for IDR plans unless you consolidate your debt with a Direct Consolidation loan. Then, the only IDR plan available is income-contingent repayment, the payment plan that uses a larger portion of your discretionary income to determine your payments.
- They can’t be transferred to the child: Parent PLUS loans are in the parent’s name; the child is not legally obligated to repay the balance. The federal government also doesn’t allow Parent PLUS loans to be transferred to the student; the only way to do that is to refinance your parent loans with a private lender like ELFI.
Given these drawbacks, it’s wise to consider other options to help your child with their college costs.
7 Alternatives to Parent PLUS Loans
Parent PLUS loans can be an expensive form of debt. Fortunately, you may have some alternatives to help your student pay for school. Here are seven other options:
1. Grants
Make sure your child completes the Free Application for Federal Student Aid (FAFSA). It’s not just for student loans; it’s also what the federal government, state government, schools, and non-profit organizations use when determining eligibility for grants. Grants are typically based on financial need, and they don’t need to be repaid.
2. Scholarships
Scholarships are excellent alternatives to Parent PLUS loans. Usually awarded by colleges, companies, and non-profit organizations based on a student’s merit or achievements, scholarships also don’t need to be repaid. Your child can start their search for available scholarships on FastWeb and Scholarships.com. They can also ask their student advisor for information on scholarships from local companies and organizations.
3. School Aid
If you want to avoid Parent PLUS loans and can’t cover the cost of college with scholarships, grants, and savings, contact the college’s financial aid office. They may have other financial aid programs that can help, such as institutional loans.
4. Work-Study Programs
If your child is willing to work while in college, a federal or state work-study program can be an excellent way to pay for some of their education while offering valuable work experience. Your child can get a job related to their major, and they can use their wages to pay for school. If you’re interested in work-study jobs, contact the college’s financial aid office to see if they participate in federal or state programs.
5. Part-Time Jobs
If your child’s college doesn’t participate in a federal or state work-study program, your child can get a part-time job instead. By working a few hours a week, they can earn money and pay for a portion of their college expenses on their own. Your child can begin their search for available part-time opportunities on SnagAJob and HandShake.
6. Federal Undergraduate Loans
Other federal loans can act as alternatives to Parent PLUS loans. Depending on your child’s financial need and student status, they may qualify for Direct Subsidized or Direct Unsubsidized loans.
Unlike Parent PLUS loans, Direct Subsidized and Unsubsidized loans are in the child’s name. As a parent, you have no obligation to repay the loan, and it won’t show up on your credit report. These loans also have lower interest rates and fees than Parent PLUS loans. If your child qualifies for Direct Subsidized loans, the federal government will even cover the interest that accrues while your child is in college, for six months after they leave school or graduate, and during periods of deferment.
7. Private Student Loans
When considering other options besides Parent PLUS Loans, think about private student loans. You can use private parent loans or undergraduate loans to pay for college. While they don’t have the same benefits as federal student loans, there may be some advantages to using private loans.
Private parent loans may have lower interest rates and fees than Parent PLUS Loans, and you can choose a loan term that suits your budget. With a private undergraduate loan, your child can apply for a loan on their own and choose between fixed and variable interest rates. However, you may have to co-sign their loan application if they don’t have a job or good credit.
If you decide that private student loans make sense for your situation, use ELFI’s Find My Rate tool to get a rate quote without affecting your credit score.
Paying for College
Now that you know about their interest rates and repayment terms, you can examine your options and compare them to Parent PLUS Loan debt. You can still help your child pay for school by showing them how to apply for grants, scholarships, work-study programs, and private loans, they can make informed decisions about what payment strategies are best for them.
