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Parent Loan Guide





BEFORE YOU CONTINUE READING: The information in this Guide, as it relates to Government-Owned Loans, such as the Direct Subsidized, Direct Unsubsidized, and Direct Parent Plus Loans, is valid only under normal circumstances. There are special benefits being applied on Government-Owned Loans that are not permanent but are being applied for an indefinite period of time. As well, there are proposals for federal student loan forgiveness that have a likelihood of passing, that are not reflected in this Guide. Please click here to review information on these special programs and take them into consideration when deciding if a private parent loan is right for you.


Parent Loan Overview


For most college students and parents, the cost of a degree is one of life's largest financial investments. Finding the right mix of financial aid options can be challenging. Many times, the amount of available savings, scholarships, and even federal student loans available to students simply aren't enough to cover the cost of attending college. Parent loans can be used to fund remaining costs of attending college, and can be a great tool for alleviating some or all of the student loan debt burden your student could have at graduation.


Federal parent loan programs, such as the current Direct Parent PLUS Loan, were specifically designed to help bridge the cost of a college education when other financial aid options have been exhausted. The U.S. government is the lender and owner of all "federal" loans. Non-governmental, or "private" lenders have also developed parent loan options to meet this same financial need. Under the most common parent loan programs, parents may borrow up to the cost of attendance, less other financial aid received, as determined by the school your student is attending. This ensures that the students will have enough aid to attend college while also encouraging responsible lending by preventing parents from borrowing more than is necessary. For parents that have a good credit history, a private parent loan can also offer significant savings over other student loan options.


Before considering any student loans, students and families should always start with any grants or scholarships that may be available to pay for college.




Undergraduate students and their parents have a wide variety of federal and private student loan options available for financing higher education. When comparing the various options, it is important to consider the cost of the loan as well as the loan features such as repayment term, deferment and forbearance options, and any loan forgiveness programs which are available. Student loan options for undergraduate students and their parents include:


  • Direct Subsidized Loans for student borrowers,
  • Direct Unubsidized Loans for student borrowers,
  • Private loans for student borrowers,
  • Direct Parent PLUS loans for parent borrowers, and
  • Private parent loans, such as the Brazos Parent Loan, for parent borrowers.

This guide does not consider the private loans made directly to students, due to the wide variety of rates and features offered by private lenders.


Direct Subsidized Loans


Direct Subsidized Loans are a great place to start when financing a college degree. The student is the borrower on a Direct Subsidized Loan and is responsible for repaying the loan. For the 2021-2022 school year, the % fixed interest rate is competitive, especially for students that have not established a good credit history. These loans are also "subsidized" by the federal government, meaning that the interest that accrues while the student is in school is paid by the federal government. This prevents the compounding effect of capitalized interest that increases the cost of most other student loan options.


There are annual limits for Direct Subsidized Loans which, in many cases, will only cover a small portion of the cost of attending college. Qualification for these loans is means-tested, meaning many students may not qualify for Direct Subsidized Loans. Finally, there is a % loan origination fee on all Direct Subsidized Loans. The fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement.


Pros


  • Interest rate is low for the 2021-2022 school year.
  • Qualification for the loan is not based on the student's credit history.
  • Interest that accrues while the student is in school at least half-time, up to six months after separation from school, and during periods of deferment is paid by the federal government.
  • Multiple repayment plans available to accomodate for various financial situations.
  • Direct Subsidized Loans are eligible for loan forgiveness programs.

Cons

  • Annual loan limits are unlikely to cover the total cost of attending college.
  • Eligibility for Direct Subsidized Loans is subject to means-testing. Not everyone will qualify for Direct Subsidized Loans.
  • The loan origination fee (currently %) means borrowers have to incur more debt to cover the fee.

Direct Unsubsidized Loans


Direct Unsubsidized Loans are the second federal student loan option available to undergraduate students. Again, the student is the borrower on a Direct Unsubsidized Loan and is responsible for repaying the loan. They carry the same % interest rate for the 2021-2022 school year, and like the Direct Subsidized Loan, all borrowers are charged the same rate without respect to credit history. However, they differ from Direct Subsidized Loans in that interest that accrues while the student is enrolled in school remains the responsibility of the student and is capitalized and added to the principal amount of the loan when the student enters repayment. This makes the Direct Unsubsidized Loan more expensive than the Direct Subsidized Loan, especially during long periods of in-school deferment.


Loan limits for Direct Unsubsidized Loans are higher than those for Direct Subsidized Loans, but are reduced by the amount of Direct Subsidized Loans the student is awarded, and still fall short of the full cost of attendance for most major universities. Additionally, students taking out an Direct Unsubsidized Loan are charged a % loan origination fee. The origination fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement.


Pros


  • Interest rate for the 2021-2022 school year is low.
  • Qualification for the loan is not based on the student's credit history.
  • Payments are deferred while the student is in school and for up to six months afterwards, providing relief to students which don't have current income. However, this accrued but unpaid interest is capitalized and added to the principal amount of the loan, leading to a compounding effect which significantly adds to the cost of the loan. Borrowers and parents should be aware payments can be made on these loans prior to the beginning of the repayment period, thereby reducing or eliminating the capped interest.
  • Multiple repayment plans available to accomodate for various financial situations.
  • Direct Unsubsidized Loans are eligible for loan forgiveness programs.

Cons


  • Annual loan limits are unlikely to cover the total cost of attending college.
  • The loan origination fee reduces the amount of aid available, increasing the amount that has to be borrowed.

Direct Parent PLUS Loans


Direct Parent PLUS Loans were designed to help bridge the gap between the undergraduate loan options and the cost of attendance, and to provide a way for parents to help lighten the debt burden of graduating students. Unlike Direct Subsidized and Direct Unsubsidized Loans, the parent is the borrower for these loans and is responsible for repayment. However, the %, which includes a 0.25% ACH discount, fixed interest rate for loans first disbursed after June 30, 2021, on the Direct Parent PLUS Loans is not as competitive when compared to private parent loan options. It is simple to qualify for a Direct Parent PLUS loan, as the parent borrower cannot have an adverse credit history. However, this simple qualification comes at a cost: the interest rate is the same for all borrowers, regardless of credit history strength.


Limits on the Direct Parent PLUS loans, like the Brazos Parent Loan discussed below, are capped by the cost of attendance, less other financial aid received. The loan ensures enough financial aid to pay for any remaining cost of attendance after other financial aid is considered.


Direct Parent PLUS loans have three repayment plan options, which are more flexible than many private parent loan options, but more limited than the Direct Loan options for students.


There is also a loan fee on all Direct Parent PLUS loans. The loan fee is a percentage of the loan amount (currently %) and is proportionately deducted from each loan disbursement. The Brazos Parent Loan program has no origination fees, allowing you to borrow less to meet the same financial need.


Pros


  • Parents can borrow up to the full cost of attendance, less other financial aid received.
  • The credit criteria requires no adverse credit history, but is not based on the ability to repay (credit scores, debt-to-income ratios, etc.).
  • In-school deferment is available for Direct Parent PLUS Loans, though this can substantially increase the total cost of the loan.
  • Standard, Graduated and Extended repayment plans are available (although the Graduated and Extended plans will increase the total cost of the loan).
  • Direct Parent PLUS loans may be discharged if the child for whom you borrowed dies, or if you die or become totally and permanently disabled.

Cons


  • Because the Direct Parent PLUS loan is not fully credit-underwritten, the %, which includes a 0.25% ACH discount, interest rate for the 2021-2022 school year is high in today's student loan market for those with strong credit histories.
  • Limited only to the parent (biological, adoptive, or in some cases, stepparent) of a dependent undergraduate student.
  • The loan origination fee for Direct Parent PLUS Loans is significant, and increases the amount a parent has to borrow to pay for college.

Brazos Parent Loans


Brazos Parent Loans are a private student loan option for parents, grandparents, other family members and friends of students. Parents typically have a longer credit history, are currently employed, and have the ability to begin repayment as soon as the loan is disbursed. This is typically not the case for undergraduate students seeking private student loans. This can make a parent loan far less expensive than private loan options made directly to students (private loan options for students are available, but because they can vary dramatically from lender to lender, they are not discussed in this article). Brazos Parent Loans are credit-based, which allows parents with strong credit histories to qualify for some of the best rates among all undergraduate loan options. Repayment is not deferred while the student is in school, which helps prevent the surprising costs of capitalized interest.


Limits on the Brazos Parent Loan are only capped by the cost of attendance, less other financial aid received. The Brazos Parent Loan is a good option to consider for financing any remaining cost of attendance after other financial aid sources have been exhausted.


A Brazos Parent Loan also provides more loan term options than Direct Loan alternatives. But because the Brazos Parent Loan is a private loan specifically designed to offer a lower total loan cost, repayment, deferment and forbearance, and loan forgiveness options are not as generous or flexible as the Direct Loan options.


Pros


  • Today's interest rates for qualifying borrowers are lower than the current Direct Parent PLUS loan option.
  • Zero fees.
  • Multiple repayment terms are available, allowing parents to choose the term that best fits their financial goals.
  • Brazos Parent Loans can significantly reduce or even eliminate the debt burden for the student upon graduation. Your student can begin their career without excessive debt.
  • Not limited to a parent of a dependent undergraduate student. Can be used by grandparents, other family members or friends of a benefiting student.
  • Parents may borrow up to the full cost of attendance (less other financial aid received), providing peace of mind that the student will have sufficient resources to attend college.

Cons


  • Loan repayment, deferment and forbearance options are not as generous as Direct Loan alternatives.
  • Brazos Parent Loans are not eligible for the same loan forgiveness programs as Direct Loan alternatives.
  • Brazos Parent Loans are subject to credit and other eligibility criteria. Parents that do not meet these requirements will not qualify.

The Bottom Line


There are pros and cons to all of the available loan options. It is important to fully understand everything that is out there and make informed decisions based upon your personal situation and that of your student. Below is a chart that goes into more detail on the various loan options discussed above to help you do your own comparisons.


Direct Subsidized Loans Direct Unsubsidized Loans Direct Parent PLUS Loans Brazos Parent Loan
Lender U.S. Department of Education U.S. Department of Education U.S. Department of Education Brazos Education Lending Corporation
Borrower Student Student Parent Parents, grandparents, other family members or friends
Interest Rates Fixed Rate of % for loans first disbursed after June 30, 2021. Rate includes a 0.25% interest rate reduction for automatic payments. Fixed Rate of % for loans first disbursed after June 30, 2021. Rate includes a 0.25% interest rate reduction for automatic payments. Fixed Rate of % for loans first disbursed after June 30, 2021. Rate includes a 0.25% interest rate reduction for automatic payments. Fixed or variable rates from % APR to % APR. Rate includes the 0.25% Auto-Pay Discount.1
Origination Fees % of the loan amount for loans with a first disbursement on or after and before . % of the loan amount for loans with a first disbursement on or after and before . % of the loan amount for loans with a first disbursement on or after and before . None
Interest Rate Discounts 0.25% for automatic payments 0.25% for automatic payments 0.25% for automatic payments 0.25% for automatic payments
Repayment Terms 10 years is standard, but can be extended up to 25 years if you have more than $30,000 in outstanding loans. 10 years is standard, but can be extended up to 25 years if you have more than $30,000 in outstanding loans. 10 years is standard, but can be extended up to 25 years if you have more than $30,000 in outstanding loans. 5, 7, 10, 15 and 20-year repayment terms are available.2
Repayment Plans Numerous repayment plans are available.

Learn more about federal student loan repayment plans
Numerous repayment plans are available.

Learn more about federal student loan repayment plans
Numerous repayment plans are available.

Learn more about federal student loan repayment plans
Immediate Repayment
Annual Loan Limits First Year: $3,500
Second Year: $4,500
Third Year & Beyond: $5,500
(for dependent students)

Eligibility for subsidized loans are means-tested based on information submitted with the FAFSA. Not all applicants will be eligible to receive the full subsidized limit.
First Year: $5,500
Second Year: $6,500
Third Year & Beyond: $7,500
(for dependent students)

Limits include any Subsidized loan amounts awarded.
Up to the Cost of Attendance, less other financial aid received, as certified by the school. Up to the Cost of Attendance, less other financial aid received, as certified by the school.
Career Loan Limits $23,000
(for dependent students)
$31,000, including any subsidized amounts awarded
(for dependent students)
None None
Repayment Begins Payments are deferred while in school and for up to 6 months after graduation or 6 months after student drops below half-time enrollment Payments are deferred while in school and for up to 6 months after graduation or 6 months after student drops below half-time enrollment Immediately after the loan is fully disbursed to the school. An in-school deferment may be requested which allows the parent to defer payment while the child is in school and for up to six months after separation. Immediately after the loan is fully disbursed to the school.
In-school Interest Cost Interest accrued while the student is in school and for up to six months after separation is paid by the Federal Government. Interest accrued while the student is in school and for up to six months after separation is capitalized and added to the principal balance of the loan upon entering repayment. Interest that accrues before repayment begins may be paid, or will be capitalized and added to the principal balance of the loan when repayment begins. Interest that accrues before repayment begins may be paid, or will be capitalized and added to the principal balance of the loan when repayment begins.
Deferment & Forbearance Options In-school deferment is available when enrolled at least half-time at an eligible school, and for up to six months after the student graduates or ceases to be enrolled at least half-time.

Unemployment and economic hardship deferments are available for up to 36 months.

Military deferment is available while on active and post-active duty.

Discretionary and mandatory forbearance options are also available for certain situations, including financial difficulty, medical expenses, or change in employment.

Learn about federal deferment and forbearance options
In-school deferment is available when enrolled at least half-time at an eligible school, and for up to six months after the student graduates or ceases to be enrolled at least half-time.

Unemployment and economic hardship deferments are available for up to 36 months.

Military deferment is available while on active and post-active duty.

Discretionary and mandatory forbearance options are also available for certain situations, including financial difficulty, medical expenses, or change in employment.

Learn about federal deferment and forbearance options
In-school deferment is available when the benefitting student is enrolled at least half-time at an eligible school, and for up to six months after the student graduates or ceases to be enrolled at least half-time.

Unemployment and economic hardship deferments are available for up to 36 months.

Military deferment is available while on active and post-active duty.

Discretionary and mandatory forbearance options are also available for certain situations, including financial difficulty, medical expenses, or change in employment.

Learn about federal deferment and forbearance options
Forbearance of up to 12 months is available for economic hardship, granted in 3-month increments.

12 months of disaster relief forbearance is available, granted in 3-month increments.

Active-duty military forbearance for up to 36 months.
Loan Forgiveness Programs Direct Loans are eligible for the following forgiveness programs:
Closed School Discharge
Public Service Loan Forgiveness
Teacher Loan Forgiveness
Total and Permanent Disability Discharge
Discharge Due to Death
Discharge in Bankruptcy
False Certification of Student Eligibility or Unauthorized Payment Discharge
Unpaid Refund Discharge
Borrower Defense Discharge
Conditions apply for each type of forgiveness program.

Learn more about federal student loan forgiveness programs
Direct Loans are eligible for the following forgiveness programs:
Closed School Discharge
Public Service Loan Forgiveness
Teacher Loan Forgiveness
Total and Permanent Disability Discharge
Discharge Due to Death
Discharge in Bankruptcy
False Certification of Student Eligibility or Unauthorized Payment Discharge
Unpaid Refund Discharge
Borrower Defense Discharge
Conditions apply for each type of forgiveness program.

Learn more about federal student loan forgiveness programs
Direct Parent PLUS Loans are eligible for forgiveness upon the death of the borrower or the student for whom the loan was taken, upon permanent disability of the borrower, or upon discharge by a bankruptcy court. There may be other circumstances where your loan may forgiven, please see studentaid.ed.gov for a complete list. Yes, upon the death of the benefitting student, if the borrower dies and there is no cosigner, and if there is a cosigner, the loan will be forgiven only as to the deceased party.

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



Unfortunately, parents of graduate students are unable to receive federal loans on behalf of graduate students. For graduate students, the Direct PLUS Loans are made directly to the student instead of the parent. These loans are referred to as "Direct Grad PLUS Loans". That leaves private parent loans as the only option for parents who wish to finance all or a part of their graduate student's costs. Federal loan options for graduate student borrowers are limited to Direct Unsubsidized Loans and Direct Grad PLUS Loans. The Direct Unsubsidized Loan for graduate student borrowers carries a higher interest rate than the Direct Unsubsidized Loan available for undergraduate student borrowers. And with a % fixed rate for loans disbursed after June 30, 2021, the Direct Grad PLUS loan is even more expensive than the Direct Unsubsidized Loans and carry a % origination fee.


Direct Unsubsidized Loans


Direct Unsubsidized Loans for graduate school are made to students enrolled on at least a half-time basis. The graduate student is the borrower on a Direct Unsubsidized Loan and is responsible for repaying the loan. With a $20,500 annual limit for graduate students, Direct Unsubsidized Loans can be an effective option for financing graduate degrees. However, the % interest rate for the 2021-2022 school year makes Direct Unsubsidized Loans much less competitive for graduate students. Additionally, Direct Unsubsidized Loans carry a % origination fee which is deducted from each loan disbursement.


Pros


  • Eligibility for the loan is not needs-based or based on credit history.
  • Direct Unsubsidized Loans for graduate students carry a higher loan limit than the same loans made to undergraduate students.
  • Payments are deferred for students enrolled at least half-time in school and for up to six months afterwards, allowing students to attend school without current income. However, interest that accrues during the deferment period is capitalized and added to the principal balance of the loan at repayment. At a 6% interest rate, this can significantly increase the cost of the loan. Borrowers and parents should note, however, that payments can be made on these loans prior to the repayment period beginning, reducing or eliminating the capped interest.
  • Multiple repayment plans are available to accommodate for various financial situations, although these plans may increase the total cost of the loan.
  • Loan forgiveness plans are also available.

Cons


  • The % interest rate can be high for many qualified borrowers. In some instances, private parent loan alternatives may be less expensive.
  • There is a loan origination fee on all Direct Unsubsidized Loans. This amount increases the amount the student will need to borrow.
  • The current annual loan limit of $20,500 may still fall short of the cost of attendance at many colleges.

Direct Grad PLUS Loans


When other available financial aid still does not cover the cost of attendance for a graduate school program, Direct Grad PLUS Loans are available to make up the difference. The graduate student is the borrower on a Direct Grad PLUS loan and is responsible for repaying the loan. At %, which includes a 0.25% ACH discount, Direct Grad PLUS loans are substantially more expensive than Direct Unsubsidized Loans and even carry a % origination fee. To qualify for a Direct Grad PLUS Loan the student borrower cannot have an adverse credit history. However, the interest rate is the same for all borrowers, regardless of credit history. Parents willing to borrow on behalf of their graduate student may want to consider other options before their student applies for a Direct Grad PLUS Loan.


Pros


  • Eligibility for the loan is not needs-based or subject to required income levels or debt-to-income ratios.
  • The annual loan limit is designed to ensure sufficient aid to allow the student to attend.
  • Payments may be deferred while the student is enrolled in school at least half-time, and for up to six months afterwards. However, interest that accrues while the student is enrolled in school and for up to 6 months after graduation is capitalized and added to the principal balance of the loan at repayment. At %, which includes a 0.25% ACH discount, this can substantially increase the cost of the loan. Borrowers and parents should be aware payments can be made on these loans prior to the repayment period beginning, reducing or eliminating the capped interest.
  • Payments may be deferred while the student is enrolled in school on at least a half-time basis.
  • Multiple repayment plans are available to accommodate for various financial situations, though these plans may increase the total cost of the loan.
  • Loan forgiveness plans are also available, although borrowers may have a more difficult time qualifying for these programs with a Direct PLUS Loan.

Cons


  • Direct PLUS Loans are not available to parents of graduate students.
  • The interest rate of % for the 2021-2022 school year is expensive for borrowers with strong credit histories, and all borrowers must pay the % rate regardless of credit history. In some instances, private parent loan alternatives may be less expensive.
  • The % origination fee is deducted from the proceeds of the loan, which could potentially leave the borrower with unmet financial need.

Brazos Parent Loans


For parents wanting to help finance the cost of college for their graduate student, private parent loans are really the only option. Brazos Parent Loans are a private student loan option for parents and grandparents, other family members and friends of a benefiting student. Parents and other adults typically have an established credit history, current income, and the ability to begin repayment immediately at disbursement. This is not the case for many graduate students taking out loans for themselves, resulting in capitalized interest being added to the balance of the loan when they begin repayment. This can make a Brazos Parent Loan far less expensive than private loan options made directly to students. (Private loan options made directly to graduate students are available, but because they can vary dramatically from lender to lender, they are not discussed in this article. In addition, most private loans made directly to students are also required to be cosigned by a creditworthy parent.) Brazos Parent Loans are credit-based, which allows parents with strong credit histories to qualify for some of the best rates among all graduate school loan options. Repayment is not deferred while the student is in school, which helps prevent the surprising costs of capitalized interest.


Like the Direct Grad PLUS Loan, the annual limit on the Brazos Parent Loan is capped by the cost of attendance, less other financial aid received. This ensures that parents can obtain a loan to pay for any remaining cost of attendance after other financial aid has been used.


A Brazos Parent Loan also provides more loan term options than Direct Loan alternatives, allowing parents to choose a plan that best meets their financial goals. But because the Brazos Parent Loan is a private loan specifically designed to offer a lower total loan cost, deferment, forbearance and loan forgiveness options are not as generous or flexible as the Direct Loan options.


Pros


  • Interest rates can be lower than Direct Unsubsidized Loans for graduate borrowers.
  • Interest rates can be substantially lower than Direct Grad PLUS Loans made to graduate students.
  • Zero fees.
  • Multiple repayment terms are available, allowing parents to choose the term that best fits their financial goals.
  • Brazos Parent Loans eliminate the debt burden for the student upon graduation. Your student can have a clean start to their career.
  • Parents may borrow up to the full cost of attendance (less other financial aid received), providing peace of mind that the student will have sufficient recourses to attend graduate school.

Cons


  • Brazos Parent Loans are subject to credit and other eligibility criteria. Parents that do not meet these requirements will not qualify.
  • Loan forbearance options are not as generous as Direct Loan alternatives.
  • Brazos Parent Loans are not eligible for the same loan forgiveness programs as Direct Loan alternatives.

The Bottom Line


There are pros and cons to all of the available loan options. It is important to fully understand everything that is out there and make informed decisions based upon your personal situation and that of your student. Below is a chart that goes into more detail on the various loan options discussed above to help you do your own comparisons.


Direct Unsubsidized Loans Direct Grad PLUS Loans Brazos Parent Loan
Lender U.S. Department of Education U.S. Department of Education Brazos Education Lending Corporation
Borrower Student Student Parents, grandparents, other family members or friends
Interest Rates Fixed Rate of % for loans first disbursed after June 30, 2021. Rate includes a 0.25% interest rate reduction for automatic payments. Fixed Rate of % for loans first disbursed after June 30, 2021. Rate includes a 0.25% interest rate reduction for automatic payments. Fixed or variable rates from % APR to % APR. Rate includes a 0.25% interest rate reduction for automatic payments.1
Origination Fees % of the loan amount for loans first disbursed on or after and before . % of the loan amount for loans first disbursed on or after and before . None
Interest Rate Discounts 0.25% for automatic payments 0.25% for automatic payments 0.25% for automatic payments
Repayment Terms 10 years is standard, but can be extended up to 25 years if you have more than $30,000 in outstanding loans. 10 years is standard, but can be extended up to 25 years if you have more than $30,000 in outstanding loans. 5, 7, 10, 15 and 20-year repayment terms are available.2
Repayment Plans Numerous repayment plans are available.

Learn more about federal student loan repayment plans
Numerous repayment plans are available.

Learn more about federal student loan repayment plans
Immediate Repayment
Annual Loan Limits $20,500 per year. Up to the Cost of Attendance, less other financial aid received, as certified by the school. Up to the Cost of Attendance, less other financial aid received, as certified by the school.
Career Loan Limits $138,500, including all Direct Loans received for undergraduate study as well None None
Repayment Begins Payments are deferred while in school and for up to 6 months after graduation or 6 months after student drops below half-time enrollment Immediately after the loan is fully disbursed to the school. An in-school deferment may be requested which allows the parent to defer payment while the child is in school and for up to six months after separation. Immediately after the loan is fully disbursed to the school.
In-school Interest Cost Interest accrued while the student is in school and for up to six months after separation is capitalized and added to the principal balance of the loan upon entering repayment. Interest that accrues before repayment begins may be paid, or will be capitalized and added to the principal balance of the loan when repayment begins. Interest that accrues before repayment begins may be paid, or will be capitalized and added to the principal balance of the loan when repayment begins.
Deferment & Forbearance Options In-school deferment is available when enrolled at least half-time at an eligible school, and for up to six months after the student graduates or ceases to be enrolled at least half-time.

Unemployment and economic hardship deferments are available for up to 36 months.

Military deferment is available while on active and post-active duty.

Discretionary and mandatory forbearance options are also available for certain situations, including financial difficulty, medical expenses, or change in employment.

Learn about federal deferment and forbearance options
In-school deferment is available when the benefitting student is enrolled at least half-time at an eligible school, and for up to six months after the student graduates or ceases to be enrolled at least half-time.

Unemployment and economic hardship deferments are available for up to 36 months.

Military deferment is available while on active and post-active duty.

Discretionary and mandatory forbearance options are also available for certain situations, including financial difficulty, medical expenses, or change in employment.

Learn about federal deferment and forbearance options
Forbearance of up to 12 months is available for economic hardship, granted in 3-month increments.

12 months of disaster relief forbearance is available, granted in 3-month increments.

Active-duty military forbearance for up to 36 months.
Loan Forgiveness Programs Direct Loans are eligible for the following forgiveness programs:
Closed School Discharge
Public Service Loan Forgiveness
Teacher Loan Forgiveness
Total and Permanent Disability Discharge
Discharge Due to Death
Discharge in Bankruptcy
False Certification of Student Eligibility or Unauthorized Payment Discharge
Unpaid Refund Discharge
Borrower Defense Discharge
Conditions apply for each type of forgiveness program.

Learn more about federal student loan forgiveness programs
Direct Parent PLUS Loans are eligible for the following forgiveness programs:
Closed School Discharge
Public Service Loan Forgiveness
Teacher Loan Forgiveness
Total and Permanent Disability Discharge
Discharge Due to Death
Discharge in Bankruptcy
False Certification of Student Eligibility or Unauthorized Payment Discharge
Unpaid Refund Discharge
Borrower Defense Discharge
Conditions apply for each type of forgiveness program.

Learn more about federal student loan forgiveness programs
Yes, upon the death of the benefitting student, if the borrower dies and there is no cosigner, and if there is a cosigner, the loan will be forgiven only as to the deceased party.

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


For Parents of Law, Medical and MBA Students


Law, medical and MBA students are eligible for loans under the Direct Loan Program. Unfortunately, parents of law, medical or MBA students are unable to receive the federal "Direct Parent PLUS" loans on behalf of their students. Direct Unsubsidized Loans and "Direct Grad PLUS Loans" are made directly to the student instead of the parent. That effectively leaves private parent loans as the only student loan option for parents who wish to finance all or a part of their student's costs.


For the 2021-2022 school year, the Direct Unsubsidized Loan for graduate student borrowers carries an interest rate of %. This is higher than the % fixed rate Direct Unsubsidized Loan available for undergraduate student borrowers, and both of these loans carry a % origination fee. At %, the Direct Grad PLUS loan is more expensive than Direct Unsubsidized Loans and borrowers must pay a % origination fee. In many cases, the rates and fees for Direct Unsubsidized Loans for graduate students and the rates and fees for Direct Grad PLUS loans are significantly higher than private loan options.


Direct Unsubsidized Loans


Direct Unsubsidized Loans are made to students enrolled in a law, medical, or MBA program on at least a half-time basis. The student is the borrower on a Direct Unsubsidized Loan and is responsible for repaying the loan. With annual limits $20,500 for law and MBA students, and $40,500 for medical students, Direct Unsubsidized Loans can meet more financial need than the undergraduate Direct Unsubsidized Loan.


Direct Unsubsidized Loans do carry a % origination fee. The loan origination fee is a percentage of the loan amount and is deducted from each disbursement made to the school.


Pros


  • Eligibility for the loan is not needs-based or based on credit history.
  • Higher loan limits for law, MBA and medical students can leave less unmet financial need.
  • Multiple repayment plans are available to accommodate for various financial situations, although these plans increase the total cost of the loan.
  • Loan forgiveness plans are also available.

Cons


  • The % interest rate can be high for many qualified; borrowers. In some instances, private parent loan alternatives may be less expensive.
  • The loan origination fee means students will need to incur more debt to cover that cost.
  • The current annual loan limit of $20,500 (and $40,500 for medical students) may still fall short of the cost of attendance at many colleges.
  • Interest that accrues while the student is enrolled in school is capitalized and added to the principal balance of the loan at repayment. At a % interest rate, this can significantly increase the cost of the loan.
  • Additional deferment may be necessary if faced with extended periods of internship or residency, which further increase the cost of these loans.

Direct Grad PLUS Loans


When other available financial aid still does not cover the cost of attendance, Direct PLUS Loans are available to make up the difference. At %, which includes a 0.25% ACH discount, Direct PLUS loans are substantially more expensive than Direct Unsubsidized Loans and even carry a % origination fee. Eligibility for Direct PLUS Loans does involve a credit check, although credit history does not affect the interest rate. Parents willing to borrow on behalf of their law, medical or MBA student may want to consider other options before their student applies for a Direct PLUS Loan.


Pros


  • Eligibility for the loan is not needs-based or subject to income levels or debt-to-income ratios.
  • The annual loan limit is designed to ensure sufficient aid to allow the student to attend.
  • Payments may be deferred while the student is enrolled at least half-time, and for up to six months afterwards. However, interest that accrues while the student is enrolled in school and for up to 6 months after graduation is capitalized and added to the principal balance of the loan at repayment. At %, which includes a 0.25% ACH discount, this can substantially increase the cost of the loan.
  • Deferment and forbearance options are available. However, extended periods of deferment or forbearance further increase the total cost of the loan over time.
  • Multiple repayment plans are available to accommodate for various financial situations, although these plans increase the total cost of the loan.
  • Loan forgiveness plans are also available, although borrowers may have a more difficult time qualifying for these programs with a Direct PLUS Loan.

Cons


  • Direct PLUS Loans are not available to parents of graduate students.
  • The interest rate of % for the 2021-2022 school year is expensive, and all borrowers must pay the % rate regardless of credit history. In some instances, private parent loan alternatives may be less expensive.
  • The % origination fee is deducted from the proceeds of the loan, which means increasing the amount borrowed.

Brazos Parent Loans


For parents willing to assist their law, MBA or medical student, private parent loans may be the least expensive option. Brazos Parent Loans are a private student loan option for parents, grandparents and other family members, and friends of benefiting students. With low interest rates available, zero fees and by avoiding extended periods of deferment or forbearance, borrowers can lower the total cost of the loan.


Like the Direct PLUS Loan, the annual limit on the Brazos Parent Loan is capped by the cost of attendance, less other financial aid received. This ensures enough financial aid to pay for any remaining cost of attendance after other financial aid is considered.


A Brazos Parent Loan also provides more loan term options than Direct Loan alternatives, allowing parents to choose a plan that best meets their financial goals. But because the Brazos Parent Loan is a private loan specifically designed to offer a lower total loan cost, repayment, deferment and forbearance, and loan forgiveness options are not as generous or flexible as the Direct Loan options.


Pros


  • Interest rates can be lower than Direct Unsubsidized Loans for graduate borrowers.
  • Interest rates can be substantially lower than Direct PLUS Loans made to graduate students.
  • Multiple repayment terms are available, allowing parents to choose the term that best fits their financial goals.
  • Brazos Parent Loans can significantly reduce or even eliminate the debt burden for the student upon graduation.
  • Parents may borrow up to the full cost of attendance (less other financial aid received), providing peace of mind that the student will have sufficient aid to attend college.

Cons


  • Brazos Parent Loans are subject to credit and other eligibility criteria. Applicants that do not meet these criteria will not qualify.
  • Loan forbearance options are not as generous as Direct Loan alternatives.
  • Brazos Parent Loans are not eligible for the same loan forgiveness programs as Direct Loan alternatives.

The Bottom Line


There are pros and cons to all of the available loan options. It is important to fully understand everything that is out there and make informed decisions based upon your personal situation and that of your student. Below is a chart that goes into more detail on the various loan options discussed above to help you do your own comparisons.


Direct Unsubsidized Loans Direct PLUS Loans Brazos Parent Loan
Lender U.S. Department of Education U.S. Department of Education Brazos Education Lending Corporation
Borrower Student Student Parents, grandparents, other family members or friends
Interest Rates Fixed Rate of % for loans first disbursed after June 30, 2021. Rate includes a 0.25% reduction for automatic payments. Fixed Rate of % for loans first disbursed after June 30, 2021. Rate includes a 0.25% reduction for automatic payments. Fixed or variable rates from % APR to % APR. Rate includes the 0.25% Auto-Pay Discount.1
Origination Fees % of the loan amount for loans first disbursed on or after and before . % of the loan amount for loans first disbursed on or after and before . None
Interest Rate Discounts 0.25% for automatic payments 0.25% for automatic payments 0.25% Auto-Pay discount for automatic payments
Repayment Terms 10 years is standard, but can be extended up to 25 years if you have more than $30,000 in outstanding loans. 10 years is standard, but can be extended up to 25 years if you have more than $30,000 in outstanding loans. 5, 7, 10, 15 and 20-year repayment terms are available.2
Repayment Plans Numerous repayment plans are available.

Learn more about federal student loan repayment plans
Numerous repayment plans are available.

Learn more about federal student loan repayment plans
Immediate Repayment
Annual Loan Limits $20,500 per year.
$40,500 per year for medical students.
Up to the Cost of Attendance, less other financial aid received, as certified by the school. Up to the Cost of Attendance, less other financial aid received, as certified by the school.
Career Loan Limits $138,500, including all Direct Loans received for undergraduate study as well.
$224,000 for medical students, including all undergraduate Direct Loan debt.
None None
Repayment Begins Payments are deferred while in school and for up to 6 months after graduation or 6 months after student drops below half-time enrollment Immediately after the loan is fully disbursed to the school. An in-school deferment may be requested which allows the parent to defer payment while the child is in school and for up to six months after separation. Immediately after the loan is fully disbursed to the school.
In-school Interest Cost Interest accrued while the student is in school and for up to six months after separation is capitalized and added to the principal balance of the loan upon entering repayment. Interest that accrues before repayment begins may be paid, or will be capitalized and added to the principal balance of the loan when repayment begins. Interest that accrues before repayment begins may be paid, or will be capitalized and added to the principal balance of the loan when repayment begins.
Deferment & Forbearance Options In-school deferment is available when enrolled at least half-time at an eligible school, and for up to six months after the student graduates or ceases to be enrolled at least half-time.

Unemployment and economic hardship deferments are available for up to 36 months.

Military deferment is available while on active and post-active duty.

Discretionary and mandatory forbearance options are also available for certain situations, including financial difficulty, medical expenses, or change in employment.

Learn about federal deferment and forbearance options
In-school deferment is available when the benefitting student is enrolled at least half-time at an eligible school, and for up to six months after the student graduates or ceases to be enrolled at least half-time.

Unemployment and economic hardship deferments are available for up to 36 months.

Military deferment is available while on active and post-active duty.

Discretionary and mandatory forbearance options are also available for certain situations, including financial difficulty, medical expenses, or change in employment.

Learn about federal deferment and forbearance options
Forbearance of up to 12 months is available for economic hardship, granted in 3-month increments.

12 months of disaster relief forbearance is available, granted in 3-month increments.

Active-duty military forbearance for up to 36 months.
Loan Forgiveness Programs Direct Loans are eligible for the following forgiveness programs:
Closed School Discharge
Public Service Loan Forgiveness
Teacher Loan Forgiveness
Total and Permanent Disability Discharge
Discharge Due to Death
Discharge in Bankruptcy
False Certification of Student Eligibility or Unauthorized Payment Discharge
Unpaid Refund Discharge
Borrower Defense Discharge
Conditions apply for each type of forgiveness program.

Learn more about federal student loan forgiveness programs
Direct Parent PLUS Loans are eligible for the following forgiveness programs:
Closed School Discharge
Public Service Loan Forgiveness
Teacher Loan Forgiveness
Total and Permanent Disability Discharge
Discharge Due to Death
Discharge in Bankruptcy
False Certification of Student Eligibility or Unauthorized Payment Discharge
Unpaid Refund Discharge
Borrower Defense Discharge
Conditions apply for each type of forgiveness program.

Learn more about federal student loan forgiveness programs
Yes, upon the death of the benefitting student, if the borrower dies and there is no cosigner, and if there is a cosigner, the loan will be forgiven only as to the deceased party.

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


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Parent Loan Fixed rates from


% APR


Including 0.25% Auto-Pay Discount 1


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Disclaimers


1. Brazos Parent Loan fixed rates from % APR to % APR (with Auto-Pay Discount). Variable rates from % APR to % APR (with Auto-Pay Discount). Interest rates on Brazos loans are capped at 9.90%. Lowest variable rate of % APR assumes current 1 month LIBOR rate of % plus a % margin minus the 0.25% Auto-Pay Discount. Not all borrowers receive the lowest rate. If approved for a Brazos Parent Loan, the fixed or variable interest rate offered will depend on your creditworthiness, the term of the loan and other factors, and will be within the ranges of rates listed above. For the variable rate Brazos Parent loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases.

Auto-Pay Discount. The interest rate in effect will be reduced by 0.25% if either the borrower or the cosigner authorizes automated (ACH) payments from any bank account. This ACH interest rate reduction, referred to as the Auto-Pay Discount, applies only when full principal and interest payments are automatically drafted from a bank account. This interest rate reduction will not continue to apply during periods of approved forbearance or deferment. The Auto-Pay Discount will terminate if the automatic bank account payments discontinue or there are any three instances of insufficient funds at any time during the term of the loan. A borrower may requalify upon reauthorization of automatic payments from a valid bank account.


2. The tables below contain the estimated monthly payments, estimated total interest, and estimated total cost of a $10,000 loan at the median fixed and variable rates for each of the terms we offer.

Fixed Rates

Term Median APR Number of Payments Estimated Monthly Payment Estimated Total Interest Estimated Total Cost
5 Year

%
60 $

$

$

7 Year

%
84 $

$

$

10 Year

%
120 $

$

$

15 Year

%
180 $

$

$

20 Year

%
240 $

$

$


Variable Rates

(Variable APRs and amounts subject to increase or decrease. Variable rates are indexed to the one-month LIBOR rate and assume a one-month LIBOR rate of %.)


Term Median APR Number of Payments Estimated Monthly Payment Estimated Total Interest Estimated Total Cost
5 Year

%
60 $

$

$

7 Year

%
84 $

$

$

10 Year

%
120 $

$

$

15 Year

%
180 $

$

$

20 Year

%
240 $

$

$