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Proper Planning and Research Key to Finding the Best Way for Families to Pay for College

Iowa Nonprofit Offers Better Option Than Federal PLUS Loan for Families with College Students

June 14, 2022

During a time when there are so many conversations surrounding student loans and repayment, it is more important than ever for families sending their kids to college this year to not get distracted from making a plan and shopping around for the right loan for the current year.

Making a solid plan to pay for college is especially true in the current interest rate environment. The U.S. Department recently released the federal loan interest rates for the 2022–2023 academic year, and those rates will mean that families will be paying higher interest rates for federal loans than they have in recent years. While federal student loans are preferred over private loans for student borrowers due to the lower rates and benefits typically offered, the Federal Direct PLUS Loans for parents and graduate or professional students will have an increased interest rate beginning July 1. The fixed rate will rise from 6.28% to 7.54%, a jump that creates additional financial stress for families helping students with college expenses.

"We understand that while every family situation isn't the same — depending if your student is attending a two-year, four-year or other program — it is critical for families who will be paying for college to plan properly," said Steve McCullough, president and CEO of ISL Education Lending. "Simply put, if there is a need for families to borrow, it's important to compare rates from lenders and to understand how those different rates affect your future repayment and debt."

In keeping with its nonprofit mission to help Iowa students and families obtain the resources necessary to succeed in postsecondary education, ISL Education Lending retains its current interest rates on its parent loan, the College Family Loan, which offers creditworthy parents and family members a competitive alternative to the federal PLUS Loan for parents.

The College Family Loan is available with fixed interest rates of 3.19% APR to 7.40% APR with no upfront or origination fees.

"This large increase in the interest rate for the Federal Direct PLUS Loan concerns us," Steve McCullough said. "The families who take out parent loans to cover remaining college costs after other financial aid, savings and earnings are often those who can least afford high interest rates."

How the Numbers Stack Up

The U.S. Department of Education does not provide an APR for its Federal Direct PLUS Loan program. As a guide for comparing costs, however, the highest rate for ISL Education Lending's College Family Loan is 6.65% APR, whereas the 7.54% interest rate on the Federal Direct PLUS Loan translates to an 8.53% APR when combined with an upfront fee of 4.228%. The following comparison can be made for every $10,000 borrowed.

College Famliy Loan comparison to hte PLUS Loan
  College Family Loan PLUS Loan
Amount Borrowed $10,000 $10,000
APR 6.65% 8.53%
Term (in years) 10 10
Monthly Payment $114.00 $118.90
Interest Paid $3,715.00 $4,266.55
Origination Fee N/A $422.80
Total Cost $13,715.00 $14,689.35

Using the indicated PLUS Loan rate of 7.54% and the upfront fee of 4.228%, the APR for the PLUS Loan, which enters repayment immediately, would be 8.53%. ISL Education Lending's highest College Family Loan APR for an immediate repayment option is 6.65% with no origination fee.

Additional repayment options for the College Family Loan can be viewed at McCullough encourages families considering PLUS Loans for parents to compare them to private loans for families. "There are differences that might make one parent option more beneficial than the other, which is why we offer a comparison of the PLUS Loan to the College Family Loan on our website," he said.

"For the many borrowers that qualify for our lowest rates, the difference in rate compared to the PLUS Loan can equate to thousands of dollars saved for families," McCullough said. "A large portion of the education loan debt that students and families eventually repay is interest. It's critical we help them reduce future debt by offering the lowest rates we can without piling on extra fees."

Additional Resources Available

ISL Education Lending also offers a competitive private student loan option for student borrowers, often with creditworthy cosigners, called the Partnership Advance Education Loan.

Parent borrowers who may have borrowed the higher cost Direct PLUS Loan or private loans can take advantage of the Reset Refinance Loan offered by ISL Education Lending, which may offer a lower interest rate or monthly payment.

These private student loan options and ISL Education Lending's free online tools and resources to help families plan and pay for college can be found at

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Media Contact

Christopher Weishaar, Digital PR Specialist, (515) 273-7102,