What Types of Student Loans are There?

Featured Stories

Filter By Categories

Student loans can be grouped into two main types: federal and private. Federal student loans are funded by the U.S. government, while private student loans are funded by commercial entities such as banks. As you consider your options, it is important to understand the full range of loan alternatives.


Here are the main types of federal and private student loans you need to know about:


Federal Student Loans


Federal student loans have the widest range of repayment plans, easiest credit standards on most loans, and the widest range of repayment plans.


Direct Subsidized and Unsubsidized Loans


Direct subsidized and unsubsidized loans are issued to both undergraduate and graduate students by the federal government. Both offer flexible repayment plans and low interest rates. The differences between the two types of loans are whether you pay interest while you are in school and have to qualify based on need.


Subsidized loans are need-based loans. The U.S. government “subsidizes” these loans by paying the interest while the student is enrolled in at least a half-time status, during the six-month grace period after graduation, and also during period of deferment (temporary breaks from payments allowed by the government for circumstances such as economic hardship or military service).


Unsubsidized loans are not need-based. No matter how much the student or parent makes, they can borrow unsubsidized student loans. Eligibility and amount awarded are determined by the student’s year in school, other financial aid received, and the student’s cost of attendance. Unlike with subsidized student loans, students are responsible for all interest that accumulates while they are in school, during the grace period, and during any temporary breaks from payments.


Students are not limited to just one type or the other. However, students may not exceed the program’s borrowing limits, either annually or per type of degree. For instance, there is a loan limit for professional degrees that is different than the limit for undergraduate borrowing.


Direct PLUS Loans


Direct PLUS Loans are available to both graduate students and parents of undergraduates. They are offered to eligible borrowers through schools that participate in the Federal Direct Student Loan Program. Graduate students or parents of undergraduates may borrow an amount equivalent to the annual cost of attendance (as determined by the school) minus any other financial aid received. Direct PLUS Loans do require a credit check, but approval is much easier than what is generally required for private student loans.


Direct Consolidation Loans


Most students receive multiple federal student loans over the course of earning their degree. Direct Consolidation Loans enable students (and parents) to simplify the repayment process by consolidating all their loans that are in their name into one for a single monthly payment.  Consolidated loans have fixed interest rates. Borrowers can choose from a variety of payment plans including income-driven repayment options.


HRSA-Sponsored Loans


The Health Resources and Services Administration (HRSA), an agency of the U.S. Department of Health and Human Services, sponsors loan, grants, and scholarship programs for students majoring in the health professions.  This program provides four different types of loans, all of which are need-based and competitive, meaning that students must apply for acceptance into the loan program.

  • Loans for Disadvantaged Students: Qualifying students must be enrolled in a participating school of allopathic, osteopathic, podiatric, or veterinary medicine; dentistry; optometry; or pharmacy.
  • Health Professions Student Loans: Qualifying students must be pursuing a degree from a participating school in dentistry, optometry, pharmacy, podiatry, or veterinary medicine.
  • Primary Care Loans: Qualifying students must be pursuing a degree from a participating school in allopathic or osteopathic medicine.
  • Nursing Student Loans: Qualifying students must be pursuing a degree in nursing from a participating school.

Private Student Loans


Private student loans are available to both parents and students. Students borrowing privately will generally need a co-signer, a person who has the income and credit rating required to be approved for the loan, who agrees to pay the loan if the student can’t. The payment history is also reported on the cosigner’s credit report. Private student loans are considered an alternative to PLUS loans because of lower interest rates offered to borrowers or borrowers with cosigners with good credit.


The 5 Most Important Takeaways

  • There are several types of federal student loans available.
  • Unsubsidized and subsidized student loans often have the lowest interest rates and best repayment terms.
  • PLUS loans are issued by the federal government to parents and graduate students.
  • PLUS loans have easier credit standards for approval than private student loans. However, interest rates may be higher.
  • The Health Resources and Services Administration (HRSA) offers need-based, but competitive student loans for health science majors from primary care to veterinary medicine.

Sign up for updates

Popular Tags

Financial Aid and Scholarships* Cost of College* paying for college financial aid FAFSA grants and scholarships Student Loans* Saving for College* federal student loans college tuition 529 plan cost of attendance expected family contribution college financial planning financial aid award private student loans Salary and Career* taxes college savings plan room and board on-campus housing college expenses federal financial aid merit scholarships budgeting for college edmit hidden gems merit-based financial aid parent PLUS loan private universities public universities college applications living expenses CSS profile college costs edmit team education expenses financial need income application fees financial aid appeal off-campus housing loan forgiveness affordable college career college majors loan repayment student loan assistance work-study application fee waivers degree programs edmit scholarship institutional aid SAT choosing a college choosing a major in-state tuition net price prepaid tuition plans private scholarships repayment plans ACT budget college search free tuition international students internships need-based financial aid need-blind colleges qualified higher education expenses southern colleges standardized testing tuition discount tuition guarantee tuition payment plans 401k UGMA UTMA applying to college college ranking systems college spending college visits credit score discretionary income education savings accounts fees full ride scholarship grants health insurance options investment ivy league schools liberal arts degree meal plans midwestern colleges need-aware colleges out-of-state tuition retirement savings school-based scholarships student loan debt western colleges 568 presidents group Inversant MEFA asset protection allowance best price campus life college advisor college deposit concurrent enrollment cost by region cost by state crowdfunding dorms educational expenses esports fee waivers financial literacy fraternities and sororities full tuition gap year home equity loan income share agreements line of credit medical expenses military benefits new england colleges out-of-state students percent need met private college consultant saving small business state aid state schools student bank accounts student organizations title IV schools travel expenses tuition decreases tuition increases tuition insurance tuition reciprocity undocumented students