The interest rate of a parent PLUS loan for the 2026-2027 school year is 8.05%. This rate is fixed, meaning it stays the same for the life of the loan. It applies to loans disbursed on or after July 1, 2026, and before July 1, 2027.
Parent PLUS loans are federal loans that parents can use to help pay for a dependent undergraduate student’s education. The rate is set by Congress each year and is based on the yield of the 10-year Treasury note plus an additional margin. For the 2026-2027 year, the margin is 4.6 percentage points, which results in the 8.05% rate.
How the Parent PLUS Loan Interest Rate Is Determined
The U.S. Department of Education calculates the rate each spring. It uses the high yield of the 10-year Treasury note at the final auction before June 1, then adds 4.6 percentage points. This formula is set by law and has been in place since 2013.
Because the rate is fixed, your monthly payment will not change over the life of the loan. That can help with budgeting. However, the rate is higher than rates for undergraduate direct subsidized and unsubsidized loans, which are 5.99% for the same period.
Fixed vs. Variable Rates
Parent PLUS loans have fixed rates. This means your interest rate will never increase or decrease after you take out the loan. Variable rates, common with private loans, can change, making future payments uncertain. With a fixed rate, you know exactly what you owe each month.
Current and Recent Parent PLUS Loan Interest Rates
Here is a table showing parent PLUS loan rates for recent award years. This helps you see how rates can change from year to year.
| Award Year | Interest Rate |
|---|---|
| 2024-2025 | 9.08% |
| 2025-2026 | 8.05% |
| 2026-2027 | 8.05% |
Note that the rate for 2025-2026 was the same as 2026-2027. Rates can vary significantly from year to year based on the economy.
How Interest Accrues on Parent PLUS Loans
Interest on a parent PLUS loan begins to accrue as soon as the loan is disbursed (paid out). Unlike subsidized loans, there is no grace period where interest is waived. Even while the student is in school, interest is building on the loan amount.
If you choose not to pay the interest while the student is in school, it will be capitalized. Capitalization means the unpaid interest is added to your principal balance. This increases the total amount you owe, and you will pay interest on that higher amount.
To avoid capitalization, you can make interest payments while the student is in school. Even small monthly payments can reduce the total cost of the loan significantly.
How to Calculate Your Interest Cost
You can estimate your monthly payment and total interest using the loan’s principal, interest rate, and repayment term. The standard repayment term for a parent PLUS loan is 10 years, but you can choose other plans, such as extended or income-contingent repayment.
Here is a simple example: If you borrow $10,000 at 8.05% with a 10-year term, your monthly payment would be about $121. Over the life of the loan, you would pay roughly $14,520, which includes about $4,520 in interest.
Use the federal loan simulator on the official student aid website to see different repayment scenarios. This tool can help you plan your budget.
Tips for Managing Parent PLUS Loan Interest
- Pay interest while the student is in school to prevent capitalization.
- Consider making extra payments toward the principal to reduce total interest.
- Set up automatic payments to get a 0.25% interest rate reduction.
- Explore repayment plans that fit your income, such as the income-contingent repayment plan.
Comparing Parent PLUS Loans to Private Loans
Federal parent PLUS loans offer borrower protections that private loans may not. These include deferment, forbearance, and loan forgiveness options under certain conditions. However, the interest rate may be higher than some private loans, especially for borrowers with excellent credit.
Private parent loans often have variable rates that start lower but can increase. They also require a credit check and may have fewer repayment options. Compare the total cost and benefits before deciding.
For most families, a parent PLUS loan is a safe choice because of its federal protections. But if you have strong credit, a private loan might offer a lower fixed rate.
Summary
The parent PLUS loan interest rate for 2026-2027 is 8.05%, fixed for the life of the loan. Understanding how the rate is set and how interest accrues can help you make informed decisions. Always consider your repayment options and explore ways to minimize interest costs. For current and accurate information, visit the official Federal Student Aid website.
Frequently Asked Questions
What is the parent PLUS loan interest rate for 2026-2027?
The parent PLUS loan interest rate for the 2026-2027 school year is 8.05% fixed.
How is the parent PLUS loan interest rate determined?
The rate is based on the 10-year Treasury note yield plus a 4.6 percentage point margin, set by law each year.
Is the parent PLUS loan interest rate fixed or variable?
It is fixed, so the rate stays the same for the entire life of the loan.
Can I get a lower interest rate on a parent PLUS loan?
You may get a 0.25% rate reduction by enrolling in automatic payments, but the rate itself is set by the federal government.
When does interest start on a parent PLUS loan?
Interest starts accruing as soon as the loan is disbursed, even while the student is in school.
