Loans

There are two main sources of student loans available to help pay for college: Federal Loans and Private Loans

Federal student loans are loans that are borrowed from the U.S. Department of Education. Federal loans often offer benefits such as fixed interest rates, flexible repayment plans, and options to postpone repayment during periods of enrollment or certain hardships. If eligible, students are generally encouraged to explore federal loan options first since federal loans provide additional borrower protections, benefits and repayment options.

Federal loans include:

• Federal Direct Subsidized Loans
• Federal Direct Unsubsidized Loans
• Direct PLUS Loans for Parents (Parent PLUS Loans)
• Direct PLUS Loans for Graduate and Professional Students (Graduate PLUS Loans)
• Federal Health Professions Student Loans (HPSL)
• Federal Loan for Disadvantaged Students (LDS)

Find more information about Federal Loan options.

Private student loans are loans that are borrowed from private lenders, such as banks, credit unions, state agencies, or other financial institutions. Private student loan terms vary by lender and may include different interest rates, repayment options, borrowing limits, and credit requirements. In many cases, borrowers may need a creditworthy cosigner to qualify for a loan or to receive a lower interest rate. 

Find more information about Private Loan options. 

Both federal and private student loans can help pay for college expenses, but they differ in several important ways.
 

Federal student loans are funded by the U.S. Department of Education. These loans typically offer fixed interest rates and repayment options designed to help students manage their debt after graduation.
 

When evaluating federal loans, borrowers should know:

• Most federal loans do not require a credit check. Some loan types, such as PLUS Loans, do require a credit check.
• Interest rates are fixed and do not change over the life of the loan.
• Interest rates are set by federal law and are the same for all eligible borrowers.
• Repayment plans are flexible and may include options based on income for eligible borrowers.
• Deferment and forbearance options can provide temporary payment relief during financial hardship.
• Programs for loan forgiveness may be available for eligible borrowers.
• Students must be enrolled at least half-time to receive federal student loans.
• Federal loans have semester, annual and lifetime borrowing limits, which means they may not cover all educational costs.
• Federal loans have loan fees that apply (also referred to as origination fees).

Many students choose to explore federal student loans first because they often provide standardized terms, flexible repayment options, and additional borrower protections. Private student loans may be an option for students and families who need funding beyond what is available through federal aid programs.

Private student loans are offered by banks, credit unions, state agencies, and other private lenders. Loan terms vary by lender and borrower qualifications.
 

When evaluating private loans, borrowers should know:

• Approval is typically based on credit history, income, debt-to-income ratios, or a combination of factors.
• Many students need a cosigner to qualify.
• Interest rates may be fixed or variable, and can vary from lender to lender; some borrowers with strong credit may qualify for competitive interest rates.
• Borrowing limits may be higher than those available through federal student loans; lenders may allow you to borrow up to the full cost of attendance.
• Repayment options and borrower protections may be more limited than those offered through federal student loan programs.
• Private loans typically do not offer federal benefits such as income-driven repayment plans, federal loan forgiveness programs, or broad hardship protections.