For many students and families across the United States, student loans remain a vital way to afford college. As you prepare for the 2025–2026 academic year, it’s important to understand the types of loans available, how to apply, and what to expect during repayment. Student loans generally fall into two categories: federal loans, which are backed by the U.S. Department of Education, and private loans, which are offered by banks and other lenders.
Start with Federal Student Loans
Federal student loans should always be your first choice if you need to borrow. They come with fixed interest rates, flexible repayment plans, and protections like deferment, forbearance, and loan forgiveness.
To qualify for federal loans, you must complete the Free Application for Federal Student Aid (FAFSA). This one form determines your eligibility for:
Grants (which don’t need to be repaid)
Federal work-study programs
All types of federal student loans
Types of Federal Loans for 2025
Direct Subsidized Loans
For undergraduate students with financial need. The government pays the interest while you’re enrolled at least half-time, during the six-month grace period after graduation, and during any approved deferment.
Direct Unsubsidized Loans
Available to both undergraduate and graduate students. Financial need is not required, but you’re responsible for all interest from the start.
Direct PLUS Loans
For graduate students (Grad PLUS) and parents of dependent undergraduates (Parent PLUS). These require a credit check and often carry higher interest rates than other federal loans.
Federal loan interest rates are updated each year but stay fixed for the life of your loan. Forcurrent 2025-2026 rates, visit the official Federal Student Aid website.
Considering Private Student Loans
If federal loans and other aid don’t fully cover your education costs, you may need a private loan. These are offered by banks, credit unions, and online lenders.
Key Differences from Federal Loans
Credit matters: Approval and interest rates depend on your credit score (or that of a co-signer).
Interest rates vary: You may choose between a fixed rate or a variable rate that can increase over time.
Fewer borrower protections: Private loans don’t offer income-driven repayment, forgiveness options, or government-backed deferment plans.
Private loans can help fill financial gaps, but they carry more risk and less flexibility than federal options.
Repayment and Forgiveness Options
Federal loans give you more control over how and when you repay.
The Standard Repayment Plan lasts 10 years, but other options let you adjust based on your income:
Income-Driven Repayment Plans (IDR): Like the SAVE Plan, which calculates payments based on your earnings and family size.
Public Service Loan Forgiveness (PSLF): Forgives your remaining balance after 10 years of qualifying payments if you work for a government agency or non-profit organization.
If you struggle to make payments, you may also be eligible for deferment, forbearance, or consolidation under federal programs.
Final Thoughts
Managing student loans in 2025 starts with making smart, informed choices. Always complete the FAFSA early, compare loan types, and understand your future repayment options before borrowing.
By sticking with federal loans first and using private loans only when necessary, you’ll give yourself the best shot at long-term financial stability during and after college.