Student loans help millions finance higher education, with federal and private options offering different terms, eligibility criteria, and repayment protections. This guide explains loan types and how to qualify.

Student loans enable access to college and graduate education by covering tuition, fees, books, and living expenses. Two primary categories exist: federal student loans, which are funded by the U.S. Department of Education and offer standardized terms and borrower protections, and private student loans, issued by banks and credit unions with credit-based underwriting and variable terms. Understanding the distinctions between loan types, eligibility requirements, and borrowing limits helps students and families make informed financing decisions that support educational goals without excessive debt.

Federal student loans include Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans. Subsidized loans are available to undergraduate students with demonstrated financial need; the government pays interest while students are enrolled at least half-time, during grace periods, and during deferment. Unsubsidized loans are available to undergraduates, graduates, and professional students regardless of financial need, though interest accrues from disbursement. PLUS loans allow parents of dependent students and graduate students to borrow up to the full cost of attendance minus other aid, requiring a credit check but no income verification. Federal loans offer fixed interest rates, flexible repayment plans, and deferment and forbearance options that private loans typically do not match.

Eligibility for federal student loans begins with completing the Free Application for Federal Student Aid, which collects financial information to determine need-based aid and loan limits. Undergraduates can borrow up to $5,500 to $12,500 per year depending on grade level and dependency status, with aggregate limits of $31,000 for dependent students and $57,500 for independent students. Graduate students face higher annual and aggregate limits. FAFSA must be submitted annually, and students must maintain satisfactory academic progress to remain eligible. Federal loans do not require credit checks or co-signers for most programs, making them accessible to students without credit history.

Private student loans fill gaps when federal aid and savings do not cover full costs. Lenders evaluate creditworthiness, income, and debt-to-income ratios, often requiring co-signers for students without established credit. Interest rates may be fixed or variable and typically exceed federal rates for borrowers with limited credit. Private loans lack the income-driven repayment plans, loan forgiveness options, and flexible deferment available through federal programs. Borrowers should maximize federal student loans and explore scholarships and grants before turning to private options. Understanding loan types, completing the FAFSA early, and borrowing only what is necessary ensures students finance education efficiently and responsibly.