College bound students often find they are left with a funding gap once they have exhausted all financial aid and federal student loans. Frequently, this gap is filled through Federal Parent Loans for Undergraduate Students, which are designed for parents who borrow on behalf of their student.

Many families will pay thousands of dollars in unnecessary interest and fees if they don’t do their homework, upping their total college costs. 

This federal loan for parents was once a good option for families but is no longer the lowest cost way to fill the gap. The fixed interest rate of the loan, which typically enters repayment immediately, will increase to approximately 7.60 percent for loans disbursed after July 1 in addition to a 4.264 percent upfront loan fee.

Many state based, nonprofit providers across the country are offering lower cost loan options. Iowa Student Loan is one such provider offering creditworthy parents an alternative — which has no upfront fees and a highest fixed interest rate of 6.30% for an immediate repayment loan and 7.22% for parents who defer payments while their student is in college. 

For those who meet the credit criteria, Iowa Student Loan offers two lower-cost alternatives to the PLUS Loan for families, the Partnership Advance Education Loan for student borrowers with creditworthy cosigners, and the College Family Loan for parents or family members borrowing on behalf of their student.

Iowa Student Loan also encourages responsible borrowing practices and offers families a way to compare the differences, beyond rates, between the PLUS Loan and the College Family Loan.