What are the different types of student loans available?
You can choose between two main types of student loans: federal and private. Exhausting your federal loan options first is often recommended.
When using a student loan to pay for school, you can pick either a federal or private loan. Federal student loans are backed by the Department of Education and come with federal protections that private lenders don't offer, like access to student loan forgiveness programs and income-driven repayment plans.
Private student loans are issued by private institutions such as online lenders, banks, and credit unions. You can use these loans to fill in any funding gaps after you've exhausted federal loan options.
Here’s a full comparison of the types of student loans you may be eligible for.
What types of student loans are available?
You can pay for college with federal or private debt, but within each category, there are several types of student loans available.
Federal loans
There are three main types of federal student loans, each with its own eligibility requirements. Most types of federal loans don’t require a credit check, and everyone who qualifies for a given loan receives the same fixed interest rate.
- Direct Subsidized Loans: These are available to undergraduate students who demonstrate financial need. While you're in school and during a six-month grace period after graduation, the Department of Education pays the interest on your loans for you.
- Direct Unsubsidized Loans: These loans are available to undergraduate and graduate or professional students, regardless of financial need. Borrowers are responsible for all interest that accrues.
- Direct PLUS Loans: PLUS loans are available to graduate or professional students and parents of undergraduate students. This is the only type of federal student loan that requires a credit check.
If you're juggling multiple federal loans and want to streamline your monthly payments without giving up federal benefits, you can consolidate your federal loans with a Direct Consolidation Loan. Once you’ve consolidated, the interest rates on your loans are averaged together and rounded up to the nearest one-eighth of a percent.
Private loans
After you've exhausted your federal aid options, consider using private student loans to fill in any funding gaps. You can choose different types of private loans depending on your unique situation, such as:
- Undergraduate student loans: These loans are designed for undergraduate students. If you have a thin credit profile, you'll likely need to apply with a cosigner — someone who agrees to repay the loan if you're not able to.
- Graduate student loans: Some lenders also offer private loans targeted to graduate school students, which tend to come with higher borrowing limits than undergraduate loans.
- MBA loans: An MBA loan is an option if you're pursuing a Master of Business Administration degree. You can use federal loans for your MBA, which are generally recommended before private options. Like other private loans, rates and terms vary.
- Medical student loans: Lenders also offer loans specifically for medical school. Depending on the lender, you can take out higher loan amounts of $200,000 or more to fund your education.
- Law school student loans: You can also take out a law school student loan to finance your law degree. You can take out higher loan amounts for these types of debt too.
Refinancing student loans is an option that involves taking out a new private student loan to pay off an existing private or federal debt. Refinancing can save you thousands of dollars if you qualify for a lower rate. But before you refinance a federal student loan, understand that it means losing access to federal benefits such as student loan forgiveness and income-driven repayment plans.
Fox Money rating
Fixed (APR)
4.07% - 15.48%
Loan Amounts
$1,000 up to 100% of the school-certified cost of attendance
Min. Credit Score
Does not disclose
Fox Money rating
Fixed (APR)
4.09% - 15.66%
Loan Amounts
$2,001* to $400,000
Min. Credit Score
Does not disclose
Fox Money rating
Fixed (APR)
4.43% - 14.04%
Loan Amounts
$1,000 to $99,999 annually ($180,000 aggregate limit)
Min. Credit Score
Does not disclose
Fox Money rating
Fixed (APR)
4.50% - 15.49%
Loan Amounts
$1,000 up to 100% of school-certified cost of attendance
Min. Credit Score
Does not disclose
Fox Money rating
Fixed (APR)
4.56% - 8.34%
Loan Amounts
$1,001 up to 100% of school certified cost of attendance
Min. Credit Score
670
Fox Money rating
Fixed (APR)
5.35% - 7.95%
Loan Amounts
$1,500 up to school’s certified cost of attendance less aid
Min. Credit Score
670
Fox Money rating
Fixed (APR)
5.99% - 14.00%
Loan Amounts
$1,000 to $350,000 (depending on degree)
Min. Credit Score
720
Fox Money rating
Fixed (APR)
8.42% - 13.01%
Loan Amounts
$1,000 up to cost of attendance
Min. Credit Score
680
Fox Business does not make or arrange loans.
Comparison of student loan types
The table below highlights key differences between federal and private loans for the 2023-24 school year:
Which student loan should I choose?
The best type of student loan depends on your unique situation. But for many borrowers, it's often a good idea to exhaust your federal student loan options first before taking out a private student loan.
Because most federal loans don’t require a credit check and come with standardized rates, those with no credit or low credit can qualify for more affordable loans than they’d find on the private market. This might be especially true for younger students who are just getting their start.
Federal student loans also come with protections that private lenders generally don’t provide, such as student loan forgiveness, income-driven repayment plans, and more flexible forbearance or deferment. These can be invaluable if you later need help repaying your loan.
However, that doesn’t mean that private student loans can’t have a place in your borrowing strategy. Depending on your school and degree program, you may max out your federal loan limits. In that case, private debt can help you bridge any funding gaps and stay enrolled.
In addition, borrowers with excellent credit and a reliable income may qualify for lower rates on the private market. If you don’t have great credit, a well-qualified cosigner could help you get approved and lock in better rates.