The interest rate on a parent PLUS loan for the 2026-27 school year is 8.05%. This rate is fixed for the life of the loan, meaning it will not change. The U.S. Department of Education sets this rate each year based on a formula tied to the 10-year Treasury note.
How the rate is determined
Parent PLUS loan rates are set annually by Congress. The rate is the high yield of the 10-year Treasury note at the last auction in May, plus 4.6 percentage points. For loans disbursed between July 1, 2026, and June 30, 2027, that calculation gives 8.05%.
This rate applies to all parent PLUS loans taken out for that period. It does not depend on your credit score or income.
What does 8.05% mean in real terms?
Because the rate is fixed, your monthly payment stays the same for the entire repayment term. A $10,000 loan at 8.05% over 10 years would cost about $121 per month. Over the life of the loan, you would pay about $4,560 in interest.
Here is a quick comparison of rates for different federal loans for 2026-27:
| Loan Type | Interest Rate (2026-27) | Borrower |
|---|---|---|
| Direct Subsidized/Unsubsidized (Undergrad) | 5.99% | Undergraduate students |
| Direct Unsubsidized (Graduate) | 7.54% | Graduate students |
| Parent PLUS | 8.05% | Parents of dependent undergraduates |
| Grad PLUS | 8.05% | Graduate or professional students |
How interest accrues on parent PLUS loans
Interest starts accruing as soon as the loan is disbursed. That means interest builds up while your child is in school, during the six-month grace period after graduation, and during any deferment or forbearance.
If you do not pay the interest as it accrues, it is capitalized. That means the unpaid interest is added to your principal balance, and you then pay interest on that higher amount.
How to minimize the cost of your parent PLUS loan
Even though the rate is fixed, you can reduce the total interest you pay. Here are some practical strategies:
- Make interest payments while your child is in school to avoid capitalization.
- Pay more than the monthly minimum whenever possible to reduce the principal faster.
- Consider consolidating your parent PLUS loan with other federal loans to simplify repayment, but note that the weighted average rate will be similar.
- Sign up for automatic payments to get a 0.25% interest rate reduction.
Repayment options for parent PLUS loans
Parent PLUS loans are eligible for several repayment plans. The standard plan has a 10-year term. You can also choose the graduated plan, where payments start lower and increase every two years.
Income-contingent repayment is available if you consolidate your parent PLUS loan into a Direct Consolidation Loan. This plan bases your monthly payment on your income and family size, and any remaining balance is forgiven after 25 years.
Can you refinance a parent PLUS loan?
Yes, you can refinance a parent PLUS loan with a private lender. Refinancing may give you a lower interest rate, especially if your credit is strong. However, refinancing a federal loan means you lose federal benefits like deferment, forbearance, and income-driven repayment options.
Weigh the pros and cons carefully. If you value flexibility, keep the federal loan. If you are confident in your income and want to save on interest, refinancing might be a good option.
What if you cannot afford the payments?
If you struggle to make payments, contact your loan servicer. You can request a deferment or forbearance, but interest will continue to accrue on the loan. For long-term relief, consider consolidating to access income-contingent repayment.
There is no forgiveness program specifically for parent PLUS loans, but the income-contingent plan can make payments more manageable.
Summary
The parent PLUS loan interest rate for 2026-27 is 8.05%, fixed for the life of the loan. This rate is higher than other federal loans, so it is important to borrow only what you need. Consider making interest payments during school and exploring repayment options to keep costs down. Always compare the benefits of federal versus private refinancing before making a decision.
Frequently Asked Questions
What is the current interest rate on a parent PLUS loan?
The interest rate for parent PLUS loans disbursed between July 1, 2026, and June 30, 2027, is 8.05%.
Is the parent PLUS loan interest rate fixed?
Yes, the rate is fixed for the life of the loan, so your monthly payment will not change due to interest rate fluctuations.
How is the parent PLUS loan interest rate determined?
The rate is set by Congress each year based on the 10-year Treasury note yield from the last auction in May, plus 4.6 percentage points.
Can I get a lower interest rate on a parent PLUS loan?
The federal rate is fixed, but you can reduce the total cost by making payments during school or refinancing with a private lender, though refinancing may lose federal benefits.
Do parent PLUS loans have a grace period?
There is no grace period for parent PLUS loans; interest accrues from the first disbursement, and repayment begins within 60 days after the final loan disbursement.
