Parent PLUS Loan Rates Change on July 1, 2025

Parent PLUS Loan Rates Change

BIG Ideas:

  • Parent PLUS Loans are federal loans offered by the Department of Education that let parents of undergraduate students borrow to pay for college.
  • The interest rate on Parent PLUS Loans disbursed between July 1, 2025 – June 30, 2026, has been reduced from 9.08% to 8.94%.
  • Parent PLUS Loans have some drawbacks, including higher interest rates, fees, and the unavailability of some federal loan benefits, like income-driven repayment and loan forgiveness.

As a parent, one of your most important tasks is to support, guide, and help your children throughout the stages of life, including college. But with the high cost of higher education today, you may be looking for help to provide that help.

The good news is that as a parent, you have options. One option is Parent PLUS Loans for parents, federal loans offered through the Direct Loan program by the Department of Education to help parents of undergraduate students borrow the cost of education minus financial aid.

If you’re considering a Parent PLUS Loan, there are a few things to know. One of the most important is the interest rate for Parent PLUS loans. It can be higher than that of other loans, and is subject to annual adjustment based on the rates for the 10-year Treasury. In fact, the new rate for Parent PLUS Loans disbursed between July 1, 2025 – June 30, 2026, has been set to 8.94%.

Drawbacks of PLUS Loans

Though the new rate represents a slight decrease from the previous rate of 9.08%, there are some other factors you should consider about Parent PLUS Loans:

  • There is a fee assessed on Direct Parent PLUS Loans, which is a percentage of the loan amount. The percentage for all Direct Parent PLUS Loans disbursed on or after October 1, 2020, is 4.228% and is deducted from the loan proceeds and added to the amount you borrow, resulting in interest charges.
  • Because there’s no limit to the amount you can borrow (up to the cost of attendance) and the government does not consider your ability to repay in the approval process, you could borrow more than you can afford. That can put a drain on your budget and your own financial future.
  • You can’t transfer the loan to your student so they can repay it after graduation.
  • To qualify for Public Service Loan Forgiveness on a Parent PLUS Loan, you’ll need to first consolidate it into a Direct Consolidation Loan and then repay it under the Income-Contingent Repayment (ICR) plan. Just keep in mind that only payments made after consolidation count toward PSLF, and it’s your job—not your child’s—that needs to be with a qualifying employer.

Alternatives to PLUS Loans

Before you apply for a Parent PLUS Loan, try to maximize financial aid to reduce the cost of borrowing.

Your child should also apply for scholarships and grants, which can give them access to free money for college.

After you’ve exhausted federal aid, you could apply for a private loan, credit- and income-based loans offered by banks, credit unions, and non-profits like Brazos.

With a private student loan, you can borrow up to the cost of attendance minus financial aid to cover college-related expenses, like tuition, room and board, fees, and more. Learn more about private loans vs. federal loans.

Brazos is Here to Help You with College

For more than 40 years, Brazos Higher Education has been making education more affordable. As a Texas non-profit, we offer great rates and no fees to help parents and students finance college costs. Contact us to learn more.