The parent PLUS loan interest rate is the annual percentage rate (APR) charged on federal loans that parents take out to help pay for their dependent child’s college education. As of the 2026-27 academic year, the rate is fixed at 9.08% for loans disbursed between July 1, 2026, and June 30, 2027. This rate is set by Congress each year and is based on the high yield of the 10-year Treasury note plus an additional 4.6 percentage points.
How the Parent PLUS Loan Interest Rate Is Determined
The U.S. Department of Education sets the parent PLUS loan interest rate each year. The rate is tied to the 10-year Treasury note auction held in May. The final rate is the Treasury yield plus 4.6%, and it applies to all PLUS loans disbursed from July 1 of that year through June 30 of the next year.
For example, the rate for 2026-27 is 9.08% because the May 2026 Treasury yield was 4.48% (hypothetical for illustration). This rate is fixed for the life of the loan, meaning it never changes, even if market rates rise later.
Historical Rates (for context)
| Academic Year | Parent PLUS Loan Rate |
|---|---|
| 2024-25 | 9.08% |
| 2025-26 | 9.08% |
| 2026-27 | 9.08% |
Rates have been near 9% in recent years, but they can vary. For instance, in 2020-21, the rate was 5.30% due to lower Treasury yields.
Key Features of Parent PLUS Loan Interest
- Fixed rate: The rate is locked in at disbursement and does not change.
- No compounding while in school: Interest accrues but is not added to the principal until repayment begins.
- Loan fee: There is a separate origination fee (currently 4.228% for 2026-27) deducted from the loan amount before disbursement.
- Repayment starts immediately: Parents must begin repaying within 60 days after the loan is fully disbursed, unless they request a deferment while the student is enrolled at least half-time.
How Interest Accrues and What It Means for You
Interest on a parent PLUS loan accrues daily. If you borrow $10,000 at 9.08%, the daily interest is about $2.49 (calculated as $10,000 × 0.0908 ÷ 365). Over a year, that’s roughly $908 in interest.
If you choose to defer payments while your child is in school, the interest still accrues. When repayment begins, that unpaid interest is added to the principal, a process called capitalization. This increases the total amount you owe and the interest you pay over time.
Example of Capitalization
Suppose you borrow $10,000 and defer payments for four years. At 9.08% interest, the accrued interest after four years is about $3,632. That amount is added to your principal, making your new balance $13,632. From then on, interest is charged on that higher balance.
Repayment Options and Interest Rate Impact
Parent PLUS loans are eligible for several repayment plans. The standard plan has a 10-year term, but you can extend it to 25 years under an income-contingent repayment plan. However, parent PLUS loans are not eligible for the Revised Pay As You Earn (REPAYE) or other income-driven plans unless you consolidate them into a Direct Consolidation Loan first.
Consolidation can give you access to the Income-Contingent Repayment (ICR) plan, which bases your monthly payment on your income and family size. But keep in mind that extending repayment increases total interest paid. For a $10,000 loan at 9.08%, the total interest over 10 years is about $5,200, but over 25 years it’s about $14,500.
Tips to Minimize Interest Costs
- Pay interest while your child is in school to avoid capitalization.
- Make extra payments toward the principal whenever possible.
- Consider refinancing with a private lender if you have good credit, but be aware you lose federal benefits.
- Ask your child to contribute to payments to reduce the burden.
Summary
The parent PLUS loan interest rate for 2026-27 is 9.08%, fixed for the life of the loan. This rate is higher than many private loans, but it comes with federal protections like deferment and income-contingent repayment. To manage costs, pay interest early, avoid capitalization, and explore consolidation if needed. Always compare your options and understand the total cost before borrowing.
Frequently Asked Questions
What is the current parent PLUS loan interest rate?
The parent PLUS loan interest rate for the 2026-27 academic year is 9.08%, fixed for loans disbursed between July 1, 2026, and June 30, 2027.
Can I get a lower parent PLUS loan interest rate?
No, the rate is set by Congress and is the same for all borrowers. However, you can refinance with a private lender to potentially get a lower rate, but you lose federal benefits.
When is the parent PLUS loan interest rate set?
The rate is set each year based on the 10-year Treasury note auction in May, and it applies to loans disbursed from July 1 through June 30 of the following year.
Does the parent PLUS loan interest rate change over time?
No, the rate is fixed for the life of the loan, so it does not change after you take out the loan.
How is parent PLUS loan interest calculated?
Interest accrues daily based on your principal balance. For example, on a $10,000 loan at 9.08%, daily interest is about $2.49, and annual interest is about $908.
