Looking for government student loans to help pay for college?
The federal government and some state governments provide student loans to qualifying students. To see if you qualify, file the FAFSA or apply for an available loan program directly. Borrow only what you need to avoid hefty student loan payments in the future.
Continue reading to learn about the different types of federal student loans and the available state-sponsored student loan programs.
Federal Student Loans
The federal government offers four different types of Direct Loans under the William D. Ford Federal Direct Loan (Direct Loan) Program: Direct Subsidized, Direct Unsubsidized, Direct PLUS, and Direct Consolidation. Only students who file a FAFSA are eligible for federal loans, so make sure you file every year.
Borrowing federally offers several perks like automatic deferment while you or your child is still enrolled in school. Federal student loans are also eligible for student loan repayment programs, forgiveness programs, and total and permanent disability discharge. This means there’s a way out if you become too sick to work or face financial hardship.
Direct Student Loans
Students who file the FAFSA automatically apply for the Direct Loan program. Depending on your financial need and student status, you might qualify for a subsidized loan and/or an unsubsidized loan. Your credit score does not affect your eligibility. The program provides students with a low-interest, fixed-rate loan and flexible repayment options.
Direct loans disbursed to undergraduate students between July 1, 2019 and July 1, 2019 have a 4.53% interest rate. Direct loans disbursed to graduate students have a 6.08% interest rate. All Direct loans disbursed between October 1, 2019 and October 1, 2020 also have a loan fee of 1.059%.
How much you can borrow through the Direct Loan program depends on your year in school, your student status, and the type of loan you’re taking out.
Federal Student Loan Borrowing Limits 2019-2020
| Year | Dependent Borrowers’ Annual Award Limit | Independent Borrowers’ Annual Award Limit |
| 1st Year Undergraduate | $5,500 (max of $3,500 in subsidized) | $9,500 (max of $3,500 in subsidized) |
| 2nd Year Undergraduate | $6,500 (max of $4,500 in subsidized) | $10,500 (max of $4,500 in subsidized) |
| 3rd Year & Beyond Undergraduate | $7,500 (max of $5,500 in subsidized) | $12,500 (max of $5,500 in subsidized) |
| Graduate or Professional Student | N/A | $20,500 (only unsubsidized) |
Unsubsidized vs. Subsidized Direct Loans
Undergraduate students who demonstrate financial need on the FAFSA are eligible to borrow a Direct Subsidized Loan. The government pays the interest on subsidized loans while the student is still in college. Subsidized loans are also eligible for interest forgiveness.
All undergraduate, graduate, and professional students who file a FAFSA are eligible to borrow a Direct Unsubsidized Student Loan. A Direct Unsubsidized Loan doesn’t include the perk of interest assistance or forgiveness. Interest starts accruing as soon as you take out the loan, meaning these loans are more costly than subsidized loans.
Direct PLUS Loans
Direct PLUS Loans help parents and graduate students secure the necessary funding for their own graduate education or for their child’s undergraduate education. You can borrow up to the cost of attendance minus any other financial aid.
PLUS loans have fixed interest rates and flexible repayment terms. All PLUS Loans distributed between July 1, 2019 and July 1, 2020 have a fixed interest rate of 7.08%. Loans disbursed from October 1, 2019 to October 1, 2020 also have a 4.236% loan fee.
Although interest rates are the same for everyone, the federal government still runs a credit check when processing applications. You must not have an adverse credit history to qualify.
Parent PLUS Loans
When borrowed by parents, Direct PLUS loans are called Parent PLUS loans. To receive a Parent PLUS loan, you must be the biological or adoptive parent of a dependent undergraduate student that’s enrolled at least half-time at a qualifying school and both you and your child need to meet federal student aid eligibility requirements.
Grad PLUS Loans
When borrowed by graduate or professional students, Direct PLUS loans are called Grad PLUS loans. To receive a Grad PLUS loan, you must be a degree- or certificate-seeking graduate or professional student enrolled at least half-time at an eligible school and meet federal student aid eligible requirements.
Direct Consolidated Loans
Borrowers with loans in repayment or in the grace period can consolidate multiple federal student loans into a Direct Consolidation Loan. This means one monthly payment instead of multiple. Plus, it makes you eligible for the various federal student loan repayment plans and forgiveness programs.
A consolidated federal student loan has a fixed interest rate. It’s the weighted average interest rate of your combined eligible federal student loans rounded up to the nearest 1/8 percentage. You can choose which loans to include in a consolidated loan and which to leave out.
State Government Student Loans
Several states offer student loan programs for state residents and for nonresidents attending an in-state college or university. Scroll to see if your state or the state you’re studying in offers a student loan program.
Alaska
The Alaska Commission on Postsecondary Education offers low-cost Alaska Education Loans to students and their families. Funds can be used for college or career training. You must be an Alaskan resident or a student at an eligible Alaskan college or university to apply. The loans have zero fees, but interest rates (and your eligibility) are dependent on your credit score.
Arizona
The Arizona Teacher Student Loan Program awards need-based forgivable loans to students planning to teach in an Arizona public school. You can receive up to $7,000 per academic year for up to three years. If selected for the loan, you must commit to teach in an Arizona public school for the number of years you received the loan plus one year. If you fail to fulfill that obligation, you must pay back the loan plus interest.
Connecticut
Connecticut students age 18 and up can apply for a loan from CHESLA. These low-cost, fixed-rate loans currently have a 5.15% fixed rate for the 2019 to 2020 academic year. Not everyone who applies receives a loan. You must meet credit score requirements by yourself or with the help of a cosigner.
Georgia
The Georgia Student Finance Commission sponsors the Student Access Loan (SAL) Program, which grants 1% interest loan to financially needy students. Students must pay $10 per month while in school and while in their grace period. The minimum annual loan amount is $500, and the maximum annual loan amount is $8,000.
Georgia also sponsors several cancelable loan programs. Students must fulfill a service obligation to cancel the full amount of the loan. If not, the student must pay back the loan amount plus interest.
- Georgia National Guard Service Cancelable Loan
- Georgia Military College State Service Scholarship Cancelable Loan
- Scholarship for Engineering Education (SEE) Service Cancelable Loan
- Scholarship for Engineering Education for Minorities (SEE) Service Cancelable Loan
Maine
The Maine Loan helps Maine residents cover the college costs that aren’t being paid for by scholarships, grants, and federal financial aid. Maine Loan’s fixed interest rates are 4.49%, 5.49%, or 6.49% depending on the repayment plan you choose. You can borrow up to the full cost of attendance minus financial aid.
Minnesota
The Minnesota Office of Higher Education administers the SELF Loan to Minnesota residents enrolled at an eligible institution and to nonresidents attending an eligible Minnesota institution. You can borrow up to $20,000, $7,500, or $3,000 depending on your program. Student borrowers are required to have a cosigner and to make quarterly interest payments while in school. Interest rates are the same for everyone and not based on your credit score.
New Jersey
Undergraduate and graduate students enrolled at least half-time in a New Jersey school or NJ residents attending an out-of-state school can apply for a low-interest Standard NJCLASS Loan. You can borrow up to the cost of attendance minus financial aid. Three fixed interest rates are available based on the repayment term you choose. NJCLASS loans offer lower interest rates than Federal Plus Loans; view a comparison of the NJCLASS loans and Federal PLUS loans here.
North Carolina
North Carolina’s NC Assist Loan program lends to students and parents based on credit-worthiness. Students can add a cosigner if needed. Loans are fee-free and have a fixed interest rate, which drops by 0.25% with autopay. They’re a cheaper alternative to Grad PLUS and Parent PLUS loans, but you do miss out federal borrowing protections. You can borrow up to the cost of attendance minus any financial aid.
The NC Student Assist Loan is for NC residents attending any qualifying institution and for non-residents attending an eligible non-profit Title IV school in North Carolina. It has a 5.75% interest rate. The NC Parent Assist Loan is for North Carolina residents or parents of a student attending an eligible North Carolina school. It has a 5.5% interest rate.
North Dakota
The Bank of North Dakota offers DEAL Student Loans to undergraduate and graduate students. To qualify, you must complete the FAFSA, meet credit requirements by yourself or with a cosigner, and be an ND resident or be a non-resident attending an ND school. Choose between a 4.74% fixed interest rate or a 3.93% variable interest rate.
Rhode Island
The Rhode Island Student Loan Authority (RISLA) is a non-profit quasi-state authority in Rhode Island. RISLA offers fee-free undergraduate, graduate, and parent loans of up to $45,000 per year. Fixed interest rates range from 3.64% to 5.64% depending on your repayment plan.
With RISLA loans, nurses, primary care practitioners, and college interns are eligible for perks like partial loan forgiveness or interest rate reduction. An income-based repayment plan is available to qualifying borrowers too.
Texas
In Texas, the Minnie Stevens Piper Foundation Student Loan Program is available for graduate students and undergraduate juniors and seniors who are Texas residents and enrolled full-time at a Texas college or university. An approved student can borrow a maximum of $10,000 at a fixed 4% interest rate. Students must repay the full loan amount within one year of graduating or within four years of graduating if approved for a monthly payment plan.
Vermont
Students and parents in Vermont can borrow a VSAC Student Loan or VSAC Student Loan for Parents from Vermont’s nonprofit state agency, VSAC. To qualify, you must be a Vermont resident or a nonresident attending a Vermont school. VSAC loans offer fixed interest rates that are lower than the federal Direct PLUS loans. Interest rates start at 4.79% for both parents and students who choose the immediate repayment plan.
Washington
Washington residents accepted to the Washington Aerospace Training and Research Center can apply for the Aerospace Loan Program. Approved applicants can receive up to $8,900 in loan funds, which must be repaid within four years of completing the program.
Private Student Loan Options
If you must borrow to attend college, exhaust your Direct Subsidized and Unsubsidized Loan options first. Then, you should compare private student loan options to Direct Plus and state-sponsored loan programs.
What are Private Student Loans?
Banks, credit unions, and online-only lenders offer private student loans to undergraduate and graduate students. Unlike government student loans, private student loans have competitive interest rates based on your credit score and income. This makes it hard for students get private loans without a cosigner.
Borrowing privately also means you miss out on federal borrowing protections like death and disability discharge, repayment plans, and forgiveness programs. For example, your private student loans aren’t eligible for forgiveness under the Public Service Loan Forgiveness Program even if your federal student loans are.
How Do I Choose a Private Lender?
Be smart about how you borrow private student loans by prioritizing lenders that offer these perks:
- Deferred payments while you’re enrolled at least half-time
- A six-month grace period after graduation
- A 0.25% interest rate deduction with autopay
- No origination fees or prepayment penalties
- Death and disability discharge
- Flexible repayment plans during times of unemployment or economic hardship
Many of our refinancing partners offer student loans with the above perks whether you’re refinancing or taking out a private student loan for the first time.
