When paying for college, there are two main types of student loans you will find: federal and private. Within these categories, there are several kinds of loans, each designed to cover a different academic program.
Before taking out a student loan, it’s important to understand the broader landscape of your loan options. That way, you can select the loan option that best fits the degree you are pursuing.
Federal vs. Private Student Loans
There are two main types of student loans: federal and private.
Where do student loans come from?
The federal government issues federal student loans. Each year, U.S. citizens pay federal taxes, and a portion of these tax dollars are allocated to providing federal student aid programs. Private student loans are issued by private entities such as banks and financial institutions.
Who is eligible for student loans?
To be eligible for federal student loans, you must:
- Demonstrate financial need
- Be a U.S. citizen or eligible noncitizen
- Have a valid Social Security Number
- Be enrolled or accepted for enrollment in an eligible degree or certificate program
- Be enrolled at least half-time to be eligible for Direct Loan Program funds
- Maintain satisfactory academic progress in college or career school
- Complete and sign the Free Application for Federal Student Aid (FAFSA)
- Show you’re qualified to obtain a college or career school education
Whether you are eligible for a private student loan will depend on the lender’s eligibility criteria. Each individual lender will have its own eligibility requirements.
How much can you get in student loans?
The amount you can borrow in both federal and private student loans depends on a variety of factors such as:
- The type of loan
- Your year in school
- Your school’s cost of attendance
Types of Federal Student Loans
Federal student loans come in a variety of forms depending on your year in school and your financial need.
Direct Subsidized Loans
Direct Subsidized Loans are available to undergraduate students who demonstrate financial need. While in school, the Department of Education pays the interest on Direct Subsidized Loans. So, the amount you receive in a Direct Subsidized Loan will be exactly the same the day you graduate — no interest will have accrued in the meantime.
Who is eligible for Direct Subsidized Loans?
Direct Subsidized Loans are available to undergraduate students who demonstrate financial need. Direct Subsidized Loans will cover up to 150% of your program length. So, if you are pursuing a traditional 4-year program, you can only receive Direct Subsidized Loans for 6 years (4*150%).
How much can you get in Direct Subsidized Loans?
Your university will ultimately determine your financial need, which in turn dictates how much you are eligible to borrow in Direct Subsidized Loans. For example, if your school’s cost of attendance was $20,000, and you received $15,000 in scholarships, your financial need would be $5,000. You would be eligible for up to $5,000 in Direct Subsidized Loans.
There are, however, limits to how much you can borrow based on your year in school.
Undergraduate Year 1 Annual Limit: $3,500
Undergraduate Year 2 Annual Limit: $4,500
Undergraduate Year 3 Annual Limit: $5,500
Lifetime Subsidized Loan Maximum: $23,000
So, even if your financial need was $5,000, but you are in the first year of your undergraduate education, you would only be able to receive up to $3,500 in Direct Subsidized Loans.
Direct Unsubsidized Loans
Direct Unsubsidized Loans are available to undergraduate and graduate students, regardless of financial need. Unlike Direct Subsidized Loans, the Department of Education does not pay the interest on Direct Unsubsidized Loans while you are in school. Interest will begin to accrue after the loan is disbursed.
Who is eligible for Direct Unsubsidized Loans?
Direct Unsubsidized Loans are available to both undergraduate and graduate students. You do not need to demonstrate financial need to receive a Direct Unsubsidized Loan.
How much can you get in Direct Unsubsidized Loans?
Individual universities will determine how much you can borrow in Direct Unsubsidized Loans based on your cost of attendance, any aid you’ve already received, and your dependency status.
To calculate your maximum borrowing eligibility for Direct Unsubsidized Loans, your university will first take into account any Direct Subsidized Loans you’ve already been offered. Then, the university will evaluate your dependency status and determine your eligibility with these factors in mind.
| Year in School | Dependent Status Students | Independent Status Students |
| Undergrad Year 1 Annual Limit | $5,500 | $9,500 |
| Undergrad Year 2 Annual Limit | $6,500 | $10,500 |
| Undergrad Year 3 Annual Limit | $7,500 | $12,500 |
| Graduate/Professional Degree Annual limit | N/A | $20,500 |
| Subsidized | $31,000 | $57,500 for undergrads
$138,500 for graduate/professional students |
Let’s use an example to illustrate this.
Brandon, a 3rd year undergraduate student, filed as a dependent. ($7,500 annual limit)
Brandon received $2,000 in Direct Subsidized Loans. (minus $2,000)
Brandon is eligible for up to $5,500 in Direct Unsubsidized Loans. ($7,500 – $2,000 = $5,500)
$7,500 (Brandon’s overall Direct Unsubsidized Loan eligibility) – $2,000 (What Brandon already received in Direct Subsidized Loans) = $5,500 (The maximum amount Brandon is eligible to borrow in Direct Unsubsidized Loans).
Note: This does not guarantee that Brandon will receive $5,500 in Direct Unsubsidized Loans. This is simply the maximum amount Brandon is eligible to receive.
PLUS Loans
PLUS loans come in two forms: Grad PLUS and Parent PLUS. Grad PLUS loans are available to students pursuing graduate or professional degrees. Parent PLUS loans are available to parents of dependent undergraduate students.
Who is eligible for PLUS loans?
To be eligible for a Grad PLUS loan, you must:
- Be enrolled at least half-time in an eligible graduate or professional school
- Pass a credit check
- Meet the same eligibility requirements needed for federal student aid
To be eligible for Parent PLUS loans, you must:
- Be the biological or adoptive parent of a student enrolled in school at least half-time
- Be a citizen or eligible non-citizen
- Pass a credit check
- Meet the general eligibility requirements for federal student aid
How much can you get in PLUS loans?
PLUS loans can cover the entire cost of education minus any other financial aid you’ve already received.
For example, if your cost of attendance was $50,000, and you previously received $20,000 in additional aid, you would be eligible to borrow up to $30,000 in a PLUS loan.
This is true for both Grad PLUS and Parent PLUS loans.
Direct Consolidation Loans
A Direct Consolidation loan is available to you after you’ve graduated, left school, or dropped below half-time enrollment. A Direct Consolidation loan allows you to combine multiple federal student loans into one loan. This can simplify your payments, but there are certainly various pros and cons to weigh.
Who is eligible for a Direct Consolidation loan?
To be eligible for a Direct Consolidation loan, you must have graduated, left school, or dropped below half-time enrollment. Your loans must be in repayment or in their grace period.
Your federal student loans must also be one of the following types:
- Subsidized Federal Stafford Loans
- Unsubsidized and Non-Subsidized Federal Stafford Loans
- PLUS loans from the Federal Family Education Loan (FFEL) Program
- Supplemental Loans for Students
- Federal Perkins Loans
- Nursing Student Loans
- Nurse Faculty Loans
- Health Education Assistance Loans
- Health Professions Student Loans
- Loans for Disadvantaged Students
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- FFEL Consolidation Loans and Direct Consolidation Loans (only under certain conditions)
- Federal Insured Student Loans
- Guaranteed Student Loans
- National Direct Student Loans
- National Defense Student Loans
- Parent Loans for Undergraduate Students
- Auxiliary Loans to Assist Students
Generally, you cannot consolidate a Direct Consolidation loan unless you are adding an additional loan into the consolidation.
How much can you consolidate with a Direct Consolidation loan?
Currently, there are no set limits on the amount you can consolidate with a Direct Consolidation loan.
Types of Private Student Loans
Private student loans are provided by private entities such as financial institutions and banks. They come in a variety of forms, designed for nearly all academic programs.
Undergraduate Student Loans
Private undergraduate student loans cover undergraduate degrees such as Associate’s and Bachelor’s degree programs.
Who is eligible for private undergraduate student loans?
Each individual private lender will have its own unique set of eligibility requirements. In general, most private lenders require you to:
- Attend an eligible, degree-granting program
- Be a U.S. citizen, permanent resident, or eligible noncitizen
- Meet certain income requirements
- Meet certain credit history requirements
There are a handful of private lenders that offer future-income-based student loans. These loans allow you to skip over most financial criteria many lenders require. To check your eligibility with 15+ top lenders, start here.
How much can you get in private undergraduate student loans?
How much you’re able to borrow in undergraduate private student loans depends on the lender you’re borrowing from. Most lenders will allow you to borrow up to the cost of attendance minus any other aid you’ve already received.
For example, if your school’s cost of attendance is $30,000, and you accepted $5,000 in scholarships, you would be eligible to borrow up to $25,000 in private undergraduate student loans.
Graduate Student Loans
Private graduate student loans cover graduate degree programs such as Master’s programs.
Who is eligible for private graduate student loans?
Similar to undergraduate student loans, each individual private lender will have its own unique set of eligibility requirements for graduate student loans. In general, most will require you to meet the same set of criteria as you would need to for undergraduate student loans.
How much can you get in private graduate student loans?
Most lenders will allow you to borrow up to the cost of attendance minus any other aid you’ve already received. Others have borrowing limits, some reaching $500,000.
Medical School Student Loans
Medical school student loans cover traditional school expenses such as tuition, room and board, and fees. Most medical school student loans also offer benefits designed specifically for medical school students such as residency deferment, interest-only repayment options for residency, and longer repayment periods to make payments smaller during residency.
Who is eligible for medical school student loans?
Each individual private lender will have its own unique set of eligibility requirements for medical school student loans. In general, most will require you to be enrolled in an eligible program and completing medical school or residency at least half-time.
How much can you get in medical school student loans?
Most lenders will allow you to borrow up to the cost of attendance minus any other aid you’ve already received. Others have borrowing limits, some reaching $500,000.
Law School Student Loans
Law school student loans cover traditional school expenses such as tuition and fees. But, law school loans can also support law students during the period of time between graduating and passing the bar exam.
Most law students spend roughly three months studying for the bar, and most do it right after graduation. As a recent graduate, many law students take out an additional student loan to pay for the bar course itself and living expenses for those three months of studying.
Who is eligible for law school student loans?
Each individual private lender will have its own unique set of eligibility requirements for law school student loans. In general, most will require you to be enrolled in an eligible J.D. program, completing it at at least half-time status. Recent graduates preparing for the bar may also be eligible depending on the lender.
How much can you get in law school student loans?
Most lenders will allow you to borrow up to the cost of attendance minus any other aid you’ve already received. Others have borrowing limits, some reaching $500,000.
Dental School Student Loans
Dental school student loans cover traditional dental school expenses such as tuition and fees. Most dental school student loans also offer benefits designed specifically for dental school students such as deferment and flexible repayment options should you choose to pursue a dental residency program.
Who is eligible for dental school student loans?
Each individual private lender will have its own unique set of eligibility requirements for dental school student loans. In general, most will require you to be enrolled in an eligible dental school program, completing it at at least half-time status. Recent graduates pursuing a dental residency program may also be eligible for additional post-graduate student loans to cover costs associated with residency.
How much can you get in dental school student loans?
Most lenders will allow you to borrow up to the cost of attendance minus any other aid you’ve already received. Others have borrowing limits, some reaching $500,000.
Non-Cosigned Student Loans
Non-cosigned student loans are designed for borrowers with little to no credit score.
Who is eligible for a non-cosigned student loan?
If you have at least two years of credit history, you may qualify for a non-cosigned credit-based student loan. If you do not have two years of credit history, you may want to pursue non-cosigned outcomes-based student loans.
While both are non-cosigned options, outcomes-based student loans are ideal for borrowers with no credit history. Most lenders offering non-cosigned loan options base the interest rate and terms you receive on other factors instead, such as your future income potential based on your major.
You must be enrolled in an eligible program and meet basic eligibility requirements.
How much can you get in non-cosigned student loans?
Most lenders will allow you to borrow up to the cost of attendance minus any other aid you’ve already received.
International Student Loans
International student loans are a type of private student loan available to non-U.S. citizens studying in the United States. International student loans can help you cover expenses such as tuition, room and board, books, travel expenses, health insurance, and more.
Who is eligible for international student loans?
Non-U.S. citizens studying in the United States are eligible for international student loans. As with other student loans, you must meet a lender’s basic eligibility requirements to qualify. In general, lender’s look for individuals with a U.S. citizen or permanent resident cosigner, however, there are exceptions.
How much can you get in international student loans?
Most lenders will allow you to borrow up to the cost of attendance minus any other aid you’ve already received.
Refinance Loans
Refinance loans allow you to take out a new student loan, often with better terms and interest rate, to replace your previous student loan(s). By doing so, you may pay less overall by lowering your interest rate or shortening your repayment period.
Who is eligible for a refinance loan?
Each individual refinance lender will have its own unique set of eligibility requirements. In general, most will require you to:
- Have graduated or left school
- Have attended an eligible, degree-granting program
- Be a U.S. citizen, permanent resident, or eligible noncitizen
- Meet certain income requirements
- Meet certain credit history requirements, usually with a credit score of 650 or higher
- Have a debt-to-income ratio of 65% or less
How much can you get in a refinance loan?
Most lenders will allow you to refinance up to your outstanding balance, some reaching up to $500,000.
State Loans
Many U.S. states have private student loan programs available to their residents. The program requirements, borrowing limits, and how it generally functions will vary by state.
Who is eligible for state student loans?
Each individual state will have its own unique set of eligibility requirements that may include:
- Specific income limits
- Age requirements
- Credit requirements
- Dependency status requirements
- Pursuing college in that specific state
- Demonstrating financial need
- Demonstrating sufficient academic progress
How much can you get in state student loans?
Each individual state will have its own borrowing limit for state loans.
Institutional Student Loans
Institutional student loans are provided by your college or university. With institutional student loans, the terms are set by the school. Thus, they vary by institution.
Who is eligible for institutional student loans?
Each individual college or university will have its own unique set of eligibility requirements. Schools may, however, require you to meet certain academic requirements such as having a certain GPA.
How much can you get in institutional student loans?
Each individual college or university will have its own borrowing limit for institutional loans.
Final Thoughts from the Nest
There are many different types of student loans. Each one will offer something slightly different, so be sure to compare your options closely.
As a reminder, financial aid should always be accepted in the following order:
Scholarships > Grants > Work-Study > Student Loans
When you do arrive at the student loan phase of financing your college education, be sure you understand what all of your options are. To search and compare private student loan offers in one easy application, use Sparrow.