06/02/2026
What Should We Consider When It Comes to Loans?
Federal Student Loans Should Be Your First Choice
Students should always complete the FAFSA before considering private loans. Federal student loans generally offer fixed interest rates, flexible repayment options, and protections that private lenders do not. There are two types of federal student loans and one parent loan. The total maximum amount of the student loans is $5,500 for freshmen, $6,500 for sophomores, and $7,500 for juniors and seniors. The maximum Parent PLUS limit is now $20,000 annually with a $65,000 per student maximum cap.
Federal Direct Subsidized Loans
Available to undergraduate students with financial need as determined by the FAFSA. The government pays the interest while the student is in school at least half-time.
Federal Direct Unsubsidized Loans
Available regardless of financial need but only offered to students who submit a FAFSA. Interest begins accruing immediately. Current undergraduate federal student loan rates are approximately 6.39% fixed APR for loans first disbursed during the 2025-26 academic year.
Parent PLUS Loans
Parents of dependent undergraduate students may borrow through the federal Parent PLUS program. Beginning July 1, 2026, Parent PLUS borrowing is limited to $20,000 per year per student and $65,000 total per student. Current Parent PLUS loans carry an interest rate of approximately 8.94% fixed APR.
Private Student Loans
After federal aid is exhausted, students can compare private lenders such as College Ave, SoFi, Earnest, Sallie Mae, and Citizens. Borrowers with strong credit or a qualified cosigner may qualify for rates as low as 4-6%, while many students receive offers in the 6-12% APR range. Rates vary by lender, credit score, and repayment term. Before choosing a private loan, compare several lenders and prioritize fixed-rate loans whenever possible.
