The interest rate for parent PLUS loans is fixed at 8.05% for loans first disbursed between July 1, 2025, and June 30, 2026. This rate applies to all parent PLUS loans taken out during that period, and it will not change over the life of the loan. The U.S. Department of Education sets this rate each year based on a formula tied to the 10-year Treasury note, so it can move up or down annually.
How the Parent PLUS Loan Interest Rate Is Determined
The federal government sets the parent PLUS loan interest rate for each loan year, which runs from July 1 to June 30. The rate is fixed, meaning it stays the same for the entire repayment term. The formula adds a fixed margin to the high yield of the 10-year Treasury note at the final auction before June 1.
For the 2025-2026 award year, that calculation produced an 8.05% rate. This is higher than the 9.08% rate from the 2023-2024 year but lower than the 8.05% rate from the previous year. Because rates change annually, parents should check the current rate before applying.
Current and Recent Parent PLUS Loan Interest Rates
Here is a quick look at how the parent PLUS loan interest rate has changed in recent years. This table shows the fixed rate for each loan year.
| Loan Year | Interest Rate |
|---|---|
| 2023-2024 | 8.05% |
| 2024-2025 | 9.08% |
| 2025-2026 | 8.05% |
Note that the rate for 2024-2025 was unusually high. The drop back to 8.05% for 2025-2026 reflects changes in the financial market. Always confirm the current rate on the official Federal Student Aid website before borrowing.
How the Interest Rate Affects Your Payments
The interest rate directly impacts your monthly payment and the total cost of the loan. A higher rate means you pay more over time. For example, a $10,000 parent PLUS loan at 8.05% interest with a 10-year repayment term would result in a monthly payment of about $121. The total interest paid would be roughly $4,500.
If the rate were 9.08%, the monthly payment would be about $127, and total interest would be about $5,200. That difference of about $700 may not seem huge, but on larger loans it adds up. Parents often borrow much more than $10,000, so even a 1% difference can mean thousands of dollars.
Key Facts About Parent PLUS Loan Interest
- Interest rates are fixed for the life of the loan, so your rate won’t change after you borrow.
- The rate is set each year by Congress and the Department of Education, not by private lenders.
- There is also an origination fee of 4.228% for loans disbursed after October 1, 2020, which is deducted from the loan amount.
- Interest begins accruing as soon as the loan is disbursed, even while the student is in school.
- You can pay interest while the student is enrolled to reduce the total cost, but it’s not required.
How to Reduce the Cost of a Parent PLUS Loan
While you cannot change the fixed interest rate, you can take steps to lower the overall cost. First, borrow only what you need, not the maximum amount offered. Second, consider making interest payments while the student is in school to prevent interest from capitalizing.
Third, choose a repayment plan that fits your budget. The standard plan has a 10-year term, but you can extend it to 25 years with an income-contingent repayment plan. However, a longer term means more total interest. Fourth, if you have good credit, you might be able to refinance with a private lender at a lower rate, but that would make you ineligible for federal protections like deferment and forgiveness.
Comparing Parent PLUS Loans to Other Options
Before taking a parent PLUS loan, consider other ways to pay for college. Federal direct subsidized and unsubsidized loans for students have lower interest rates. For 2025-2026, the undergraduate direct loan rate is 6.53%. These loans are in the student’s name, so the parent is not responsible.
Private student loans may offer variable or fixed rates, but they often require a credit check and may have higher rates than federal loans. Also, private loans do not offer income-driven repayment or public service loan forgiveness. Parent PLUS loans do not qualify for income-driven repayment either, but they do have a special consolidation option that can unlock access to the income-contingent repayment plan.
How to Apply for a Parent PLUS Loan
To apply, the parent must complete the Free Application for Federal Student Aid (FAFSA) and then submit a PLUS loan application online. The parent must pass a credit check, but a low credit score does not automatically disqualify you. You can still get the loan if you have an endorser or if you document extenuating circumstances.
Once approved, the funds are sent directly to the school to cover tuition and fees. Any leftover money is paid to the parent or the student, depending on the school’s policy. Make sure to sign a Master Promissory Note (MPN) agreeing to repay the loan.
Important Dates for Parent PLUS Loan Borrowers
For the 2025-2026 school year, the interest rate is 8.05% for loans disbursed on or after July 1, 2025, and before July 1, 2026. If you borrow for the 2026-2027 year, the rate will be set in late May 2026 and will apply to loans disbursed after July 1, 2026. Always check the official Federal Student Aid website for the most current rate before applying.
Final Summary
The parent PLUS loan interest rate for 2025-2026 is 8.05%, fixed for the life of the loan. This rate is set annually by the federal government, so it can change each year. To minimize costs, borrow only what you need, consider paying interest while the student is in school, and compare your options carefully. Always confirm the current rate and fees before you apply.
Frequently Asked Questions
What is the current interest rate for parent PLUS loans?
As of August 2026, the interest rate for parent PLUS loans disbursed between July 1, 2025, and June 30, 2026, is fixed at 8.05%.
Can the parent PLUS loan interest rate change after I borrow?
No, the rate is fixed for the life of the loan, so it will not change once you sign the loan.
How often does the parent PLUS loan interest rate change?
The rate is set each year for loans disbursed in a given award year, which runs from July 1 to June 30. So it can change annually for new loans.
Are there any fees besides interest on parent PLUS loans?
Yes, there is an origination fee of 4.228% that is deducted from the loan amount before funds are sent to the school.
Can I get a lower interest rate on a parent PLUS loan?
The federal rate is fixed, but you might lower your overall cost by refinancing with a private lender, though that would mean losing federal benefits like deferment and forgiveness.
