Parent PLUS vs Student Loans: What's the Right Choice for Your Family's College Future?

If you’re a parent staring down the cost of college, you’ve probably asked yourself: Should I take out a Parent PLUS loan, or should my child borrow in their own name? It’s not an easy decision. Both paths come with trade-offs around responsibility, credit impact, and even forgiveness potential.

With new federal repayment rules rolling out in 2026 under the One Big Beautiful Bill (OBBB), the answer is shifting. What may look like the “easier” option today could change as repayment rules and forgiveness caps evolve. Let’s break down what this means for you and your student—without the jargon.

Parent PLUS Loans: The Parent Bears the Burden

Parent PLUS loans allow you to borrow directly from the federal government to pay for your child’s education. They’re relatively easy to qualify for, but the responsibility is squarely on you, not your child.

Key considerations for parents today:

• Credit check matters. A Parent PLUS loan requires a basic credit check. If approved, the loan becomes your responsibility.
  
• Higher interest rates. Parent PLUS loans typically carry higher interest rates than student loans in a child’s name.
  
• Limited forgiveness options. Unlike student borrowers, parents don’t have broad access to forgiveness programs like PSLF unless they consolidate into specific repayment plans.
  
• Impact on your financial future. If you’re nearing retirement, taking on tens of thousands in loans could mean delaying savings or adjusting your retirement timeline.

Many parents take on PLUS loans because they want to protect their child from debt. But in doing so, they sometimes sacrifice their own financial security.

Student Borrowing: Teaching Responsibility Early

When your child borrows in their own name, they typically take out Direct Subsidized or Unsubsidized Loans.

What this looks like today:

• Borrowing limits. Students can’t borrow unlimited amounts. The cap is lower than Parent PLUS loans, which means families may still need to cover a gap.
  
• Access to forgiveness. Students have broader eligibility for programs like Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR).
  
• Credit building. Borrowing helps your child establish credit history, something that will benefit them when applying for mortgages or other major loans later.
  
• Shared responsibility. The debt remains theirs, not yours, encouraging responsibility and financial literacy.

Many parents see this as a valuable “teaching moment.” While it might feel tough to let your child carry the weight of borrowing, these loans come with protections and forgiveness pathways not available to parents.

The Game-Changer: OBBB and the New Repayment Assistance Plan (RAP) in 2026

Starting no earlier than July 2026, repayment will look very different for new borrowers under the Repayment Assistance Plan (RAP)—part of the One Big Beautiful Bill (OBBB).

Here’s what parents need to know:

• RAP becomes the default plan. For students who borrow after July 1, 2026, or those who consolidate loans after that date, RAP will likely be the only repayment plan available.
  
• Income-based payments without poverty-line deductions. Unlike today’s plans, RAP calculates payments on adjusted gross income with a flat $50/month deduction per dependent. For some families, this means higher monthly payments.
  
• Winners and losers.
  
  • Families with low income or multiple dependents may benefit, as RAP adjusts downward for family size.
    
  • Middle- and high-income borrowers (especially joint filers with one high earner and one low earner) may face larger monthly bills compared to today’s SAVE or IBR plans.
    
• Forgiveness stays, but the path shifts. RAP still allows forgiveness after a set number of years, which remains a critical relief valve for borrowers.

For parents, this means encouraging your child to borrow in their own name could actually pay off more in the long run. With RAP in place, student borrowers may have fairer repayment terms and forgiveness pathways than Parent PLUS borrowers.

Putting It All Together: Which Option Fits Your Family? 

Parent PLUS may make sense if:

• You have the income and financial security to take on the loan without jeopardizing retirement.
  
• You want to control repayment yourself instead of relying on your child
  
• You’re comfortable with limited forgiveness options.

Student borrowing may make sense if:

• You want your child to have access to broader repayment and forgiveness programs.
  
• You’d prefer they build credit and learn financial responsibility.
  
• You want to preserve your retirement security.

Ultimately, the right choice depends on your family’s financial situation and future plans. But as RAP becomes the standard in 2026, the scales are tipping toward student borrowing as the smarter, more flexible option.

The Human Side: More Than Numbers ❤️

This decision isn’t just about math—it’s about family values, goals, and peace of mind. Some parents feel proud to take on the burden so their child doesn’t start life with debt. Others see it as an opportunity for their child to learn accountability. Neither is wrong.

But what’s important is to make an informed choice, not one made under pressure or without understanding the long-term consequences.

Before you decide, ask yourself: Does my employer offer benefits like student loan repayment assistance or college financial planning support? Many companies now partner with organizations like PeopleJoy to help families reduce the cost of education and manage debt more effectively.

👉 Take the first step today: Check if your employer offers benefits that can help you and your child navigate the road to college debt-free.