Parent Loan vs. Federal Direct Parent PLUS Loan

Brazos Parent Loan vs. Federal Direct Parent PLUS Loan

Parent PLUS Loans are federal student loans awarded directly by the federal government to the biological or adoptive parent to help cover the cost of their dependent child’s undergraduate education.

The current fixed interest rate for a Direct Parent PLUS loan is 8.05%. (or 7.8% with a .25% auto-pay discount). This federal loan also has an origination fee of 4.23% of the amount borrowed. To apply for the Parent PLUS loan, families must complete the Free Application for Federal Student Aid (FAFSA®) form.

The Federal Direct Parent PLUS loan is a “one size fits all” solution where all borrowers, regardless of creditworthiness or income, receive this interest rate and pay this origination fee.

The "Apply Now" button below will take you to apply for a Brazos Parent Loan, not a Federal Direct Plus Loan.  To compare the difference further, continue reading below.

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Parent Loan vs. Federal Direct Parent PLUS Loan

Brazos Parent Loans Are a Lower Cost Alternative

parent loans

A Brazos private parent loan is an affordable alternative to a Direct Parent PLUS loan, and is often a better option for parents!

  • Brazos rates are better. Brazos offers parent loans at a fixed rate as low as 2.50% APR5 compared to a 7.8% fixed rate (both with a .25% auto-pay discount) offered by the Federal Direct PLUS Parent loan.
  • Even at our highest fixed rate, the Brazos parent loan is a lower-cost alternative to the Direct Parent PLUS loan. In all cases, qualifying parents will pay a lower fixed interest rate with a Brazos parent loan than they can get with a Direct Parent PLUS loan.
  • Click HERE to compare the cost of Parent PLUS Loan versus Brazos Parent Loan.
  • Fees are an important consideration. The Direct Parent PLUS loan has an origination fee of 4.23%, which takes a bit out of the loan proceeds upfront.
  • For a $10,000 loan, parents pay an origination fee of $423.00, which means the total amount available for tuition and other education expenses is only $9,577.00. By comparison, Brazos parent loans have zero origination fees, so parents have 100% of the amount borrowed available to pay for education.
  • Plus, Brazos offers multiple loan terms so parents or others can fit loan repayment easily into their budget, putting parents’ minds at ease and allowing students the opportunity to focus on learning and preparing for their future.

Brazos Parent Loan Rates5

Fixed Rates

Starting at

% APR

Including 0.25% Auto-Pay Discount3

Variable Rates

Starting at

% APR

Including 0.25% Auto-Pay Discount3

Brazos Parent Loans vs. Direct Parent PLUS Loans

Brazos Parent LoansDirect Parent PLUS Loans
Interest ratesFixed rates from % APR to 8.22% APR.5 Variable rates from 4.32% APR to 8.22% APR.5For the 2023-2024 school year, the Parent PLUS loan rate is fixed at 8.05% (or 7.8% with auto-pay discount) regardless of the borrower’s credit history.
Origination FeesZero origination feesOrigination fee of 4.23% of the amount borrowed, which is dedicated from the proceeds of the loan.
BorrowerAny parent, grandparent, spouse, family member, or friend of the studentLimited to the biological or adoptive parent of the student (in some cases, step-parents).
Eligible DegreesAvailable for undergraduate, graduate, medical, law and other professional degree students.Limited to students pursuing undergraduate degrees only.
Auto-pay discountYes. .25% auto-pay discount available.3Yes. .25% auto-pay discount available.
LenderBrazos Education Lending Corporation, a nonprofitUnited States Department of Education
How much may I borrow each school period?You may borrow up to the Cost of Attendance, less other financial aid, as certified by the school.You may borrow up to the Cost of Attendance, less other financial aid, as certified by the school.
What repayment terms are available?Multiple terms are available.10 years is standard but can be extended up to 25 years if you have more than $30,000 in outstanding loans.
What repayment plans are available?Immediate RepaymentStandard Repayment Plan Graduated Repayment Plan Extended Repayment Plan In-school deferment is available as long as the student is enrolled at least ½ time. For more information about Parent PLUS Loan application and repayment plans, visit studentaid.gov
Are there any prepayment penalties?No.No.
Qualifying Credit CriteriaMust have a FICO score of at least 680 (or apply with a qualifying cosigner), have a strong credit history and meet other credit requirements.No adverse credit history.
Is in-school deferment available?No. Repayment begins immediately after the loan is fully disbursed.Yes. Upon request, but interest will still accrue during the in-school period and for 6 months post-graduation. Unpaid interest is added to the principal balance once full repayment begins.
Is there a cumulative borrowing limit?No. You may borrow up to the Cost of Attendance, less other financial aid, as certified by the school.No. You may borrow up to the Cost of Attendance, less other financial aid, as certified by the school.
Can a parent loan be transferred to a child?NoNo
Is a school certification required?Yes.Yes.
What interest rate types are available?Fixed and variable-rate loans are available.Fixed-rate loans only.
Is my interest deductible for tax purposes?Yes, your interest paid may be deductible, subject to certain limitations. Please consult your financial advisor for deductibility in your particular situation.Yes, your interest paid may be deductible, subject to certain limitations. Please consult your financial advisor for deductibility in your particular situation.
Is a portion of my interest subsidized?NoNo. Unlike Undergraduate Direct Loans, Parent Plus loan interest is not subsidized.
When does interest capitalize?Once upon entering repayment and subsequently upon entering repayment after any period of deferment or forbearance.Once upon entering repayment and subsequently upon entering repayment after any period of deferment or forbearance.
Can I pay interest on the loan before the loan is fully disbursed?Yes, you may pay interest on the loan prior to full disbursementYes, you may pay interest on the loan prior to full disbursement
Is forbearance available?Yes, up to one year of hardship forbearance is available in three-month increments. Additional special forbearance options, such as military and natural disaster are available. Interest will continue to accrue and will be added to the balance of the loan once the loan re-enters repayment.Yes, forbearance is unlimited, but your servicer may set a limit on the maximum period of time. Interest will continue to accrue and will be added to the balance of the loan once the loan re-enters repayment. There are other special forbearance options and repayment plans that may be available to you. See studentaid.gov
Is loan forgiveness available?Yes, upon the death of the benefitting student for whom the loan was taken out, the loan will be forgiven as to all parties. Upon the death of the borrower or cosigner, the loan will be forgiven only as to the deceased party.Yes, upon the death of the borrower or the student for whom the loan was taken and upon the permanent disability of the borrower. There are other special loan forgiveness programs that may be available to you. Please see studentaid.ed.gov for a complete list.

Please be sure to check out https://studentaid.gov/ for current information on all federal student loan programs.

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