Borrow Smart. Save More

Federal student loans are a smart first-choice borrowing option for families when paying for college. Offered by the U.S. Department of Education, these loans provide low interest rates,  valuable borrower protections, flexible repayment options, and do not typically require a cosigner. Understanding the differences between federal loan types can help parents and students make informed borrowing decisions and minimize long-term debt. 

Need-Based Loans That Don't Accrue Interest While You're in School

Federal Direct Subsidized Loans are designed for undergraduate students who demonstrate financial need as determined by the FAFSA. The federal government pays the interest while the student is enrolled at least half-time and during certain deferment periods. Federal Direct Subsidized Loans also include an annually updated origination fee, which is deducted from each loan disbursement before funds are sent to the school.

Key Benefits:

• No payments required while the student is enrolled at least half-time and during the six-month grace period after leaving school
• No interest accrues during school enrollment or the grace period
• Available to eligible students who demonstrate financial need through the FAFSA

Flexible Federal Loans Available Regardless of Financial Need

Federal Direct Unsubsidized Loans are available to most students regardless of income. While repayment is deferred until after school, interest begins accruing as soon as the loan funds are disbursed. Federal Direct Unsubsidized Loans also include a 1.057% federal loan origination fee, which is deducted from each loan disbursement before funds are sent to the school.

Key Benefits:

• No payments required while enrolled at least half-time and during the six-month grace period
• Available to eligible undergraduate and graduate students regardless of financial need
• Offers federal repayment options and borrower protections

Additional Funding to Help Cover Remaining College Costs

Parent PLUS Loans allow parents who do not qualify for lower-interest-rate private loans to borrow federal funds to help pay for education expenses not covered by financial aid, scholarships, savings, or other resources. These loans can help bridge funding gaps when additional assistance is needed. Federal Direct PLUS Loans also include a 4.228% federal loan origination fee, which is deducted from each loan disbursement before funds are sent to the school.

Important Considerations:

• Credit approval is required, and borrowers must not have an adverse credit history
• Parents with adverse credit may still qualify by meeting additional federal requirements
• Current borrowing limits allow up to $20,000 annually and $65,000 in aggregate borrowing per student

Compare Your Options Before You Borrow

Federal student loans can provide valuable benefits, but it's important to understand borrowing limits, interest costs, and repayment responsibilities. Before borrowing, families should compare all available resources, including scholarships, grants, tuition payment plans, savings, and federal loan options, to create a college financing strategy that fits their budget.

Before You Borrow:

• Complete the FAFSA to determine federal aid eligibility
• Maximize scholarships and grants that do not require repayment
• Review repayment terms and future monthly payment obligations
• Borrow only what is needed to help minimize future student debt

When grants,  scholarships, savings, and federal loans aren't enough to cover college costs, non-profit student loans can help bridge the gap. Unlike traditional for-profit lenders, non-profit lenders are mission-driven organizations focused on helping students and families access affordable higher education.

Many non-profit student loan programs offer competitive interest rates, flexible repayment options, and borrower-friendly benefits designed to support long-term financial success. For families comparing private loan options, non-profit lenders are often worth exploring before turning to traditional for-profit lenders.

Flexibility and Support When You Need It Most 

Many non-profit lenders offer robust borrower benefits designed to help students and families successfully manage their loans after graduation.

Common Features Include:

• Transparency, clear and concise terms
• Flexible repayment support and hardship assistance programs
• Personalized customer service and educational resources

Compare All Financing Options Before Borrowing 

Non-profit lenders generally offer lower interest rates than for-profit lenders to qualified borrowers.  While non-profit student loans can be an affordable financing option, they are still credit-based loans.  Families should carefully compare available options before making a borrowing decision.

Before Applying:

• Maximize scholarships, grants, and federal student aid first
• Review credit requirements and cosigner obligations
• Compare rates, repayment terms, and borrower benefits from multiple lenders

For families who need additional funding beyond federal aid, non-profit student loans can provide a more affordable, borrower-focused alternative to many for-profit private lenders. Taking time to compare options can help reduce college costs and support long-term financial success.