Types of student loan borrowing

There are three types of federal student loans. They’re all provided by the government through the Federal Direct Loan Program.

• Direct Subsidized Loans are based on financial need.
• Direct Unsubsidized Loans are not based on financial need. They’re not credit-based, so you don’t need a cosigner. Your school will determine how much you can borrow, based on the cost of attendance and how much other financial aid you’re receiving.
• Direct PLUS Loans are credit-based, unsubsidized federal loans for parents and graduate/professional students.

It’s important to consider federal student loans before you take out a private student loan, because there are differences in interest rates, repayment options, and other features.
Learn more about federal student loans

Types of private student loans

When you’ve explored scholarships, grants, and federal loans, and still need money for college, you can consider a private student loan.

• They’re issued by a bank or other financial institution.
• Private student loans are taken out by the student; they’re often cosigned by a parent or another creditworthy individual.
• Parent loans are another way to get money for college. A parent or other creditworthy individual takes out the loan to help their student pay for college.

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