Most people picture a student loan application as one form and one yes-or-no answer. It isn’t. A federal student loan comes out of the FAFSA, gets offered by your school, and only becomes real after you accept it, sign a master promissory note and finish a short counseling module. Parent loans and private loans are separate applications with their own credit checks. Doing these in the wrong order is the single most common way families end up borrowing more, at a higher rate, than they needed to.
The rules also changed on July 1. Grad PLUS loans are closed to new borrowers, Parent PLUS loans now have hard caps, part-time students get smaller loans, and anyone borrowing a new federal loan now chooses between just two repayment plans. This guide walks through the application order that still works, what each borrower type can get today, and the situations that trip people up: a parent turned down for credit, a nursing student caught in a court fight, a returning adult, a family with a past default.
Nine Straight Answers Before You Borrow
These are the questions families ask a financial aid office in the first five minutes. Quick answers here; the detail comes later in the guide.
At StudentAid.gov, by filing the FAFSA. There is no separate federal loan application for students. Your school reads the FAFSA, builds an aid offer, and you accept the loan amount you want in the school’s portal.
For classes starting between July 1, 2027 and June 30, 2028, the 2027–28 form, which opened in late September and uses 2025 tax information. If you still need aid for this school year, the 2026–27 form remains open until June 30, 2027.
Not for students. Direct Subsidized and Unsubsidized Loans have no credit check and no cosigner. Parent PLUS loans check for adverse credit history, and private lenders run a full credit review.
Usually not on their own. A dependent first-year student can borrow up to $5,500 in federal loans, with no more than $3,500 subsidized. That limit did not change on July 1. The rest has to come from grants, savings, a parent loan or a private loan.
Only if you already had a federal Direct Loan disbursed for your current program before July 1, 2026 and stay enrolled. That carve-out lasts up to three academic years. New graduate students now borrow only unsubsidized loans, up to $20,500 a year or $50,000 in programs that count as professional.
For new Parent PLUS borrowers, up to $20,000 a year and $65,000 in total for each dependent student, no matter how many parents borrow. Before July 1, parents could borrow up to the full cost of attendance.
Yes, starting this school year. Schools must now cut annual loan amounts in proportion to how far below full-time you enroll. You still need at least half-time enrollment to borrow at all.
For families with excellent credit, private fixed rates now start around 2% APR, well under the 9.07% PLUS rate. But private loans lack income-based repayment and federal forgiveness, so the low rate buys less protection.
No. You can accept less, or decline loans entirely, in the school’s aid portal. You can also return a disbursed loan within 120 days with no interest or fees.
How to Apply for Student Loans, Step by Step
This is the order that avoids the two expensive mistakes: borrowing privately before using cheaper federal money, and missing the free grant money that runs out on a first-come basis.
Create StudentAid.gov accounts for everyone on the form
The student needs an account, and so does each “contributor,” usually a parent for dependent students or a spouse for married ones. Each account needs its own email address and phone number. Make the accounts a few days ahead: Social Security records have to match before the account can sign and consent to the tax data transfer. A parent without a Social Security number can still create an account.
Being a contributor does not make a parent responsible for the student’s loans. It only supplies financial information. People hold off on this step out of that worry more often than you would expect.
File the FAFSA early, and look up your state deadline first
The federal deadline for the 2027–28 form is June 30, 2028, but that date mostly protects loan eligibility. State grant deadlines cluster between February and April, and several states hand out money until it runs out. College priority deadlines can fall as early as November. Check StudentAid.gov’s state deadline page and each school’s aid page, then aim for the earliest one on your list.
Every contributor must consent to the IRS transfer of federal tax information, even if they didn’t file a return. Without that consent, the student receives no federal aid at all. You can list up to 20 schools on one form.
Read the FAFSA Submission Summary and fix errors fast
After submitting, you get a summary showing your Student Aid Index and an estimated Pell Grant. A wrong household size, a missed child support figure or a misentered asset can change your aid by thousands. Corrections are made online. If your school selects you for verification, send the documents promptly: no federal aid disburses until verification clears.
Compare aid offers by net cost, not headline total
Schools mix grants and loans in a single “award” total, which makes a loan-heavy offer look generous. Subtract only the grants and scholarships from the cost of attendance. What remains is the amount you’ll pay or borrow. If one school’s grant is lower than another’s for a similar student, you can ask for a review, especially after a job loss, divorce, medical bills or another change the FAFSA’s 2025 tax year didn’t capture.
Accept the federal loan amount you actually need
In your school’s portal, accept, reduce or decline each loan. Take subsidized loans before unsubsidized, since the government covers subsidized interest while you’re enrolled at least half-time. If your bill is $3,000 short, accepting $5,500 “just in case” means paying interest on $2,500 you didn’t need. Any extra is refunded to you, and it is still debt.
Sign the master promissory note and complete entrance counseling
Both happen at StudentAid.gov. The master promissory note (MPN) is your legal promise to repay, and one MPN usually covers several years of borrowing at the same school. Entrance counseling is a required walkthrough for first-time borrowers that takes roughly half an hour. Many schools won’t release funds until both show up on their end, so finish them as soon as you accept the loan.
Watch the disbursement, and only then fill any gap
Loans are paid directly to the school, usually in at least two installments, and cover tuition and fees first. Once you know the true remaining balance, a parent can apply for a Parent PLUS loan at StudentAid.gov, or you can compare private lenders. Applying for these before the federal package is settled is how families overborrow.
When we mapped this timeline against a typical fall start, the gap that surprised us most was between May and August. That is when a family learns the true shortfall, and also when private lenders advertise most heavily. Families who skipped steps three and four in winter tend to fill that summer gap with whatever loan arrives first. Families who did them know exactly how much they need and can shop it.
How Much You Can Borrow Under the New Rules
Undergraduate limits for students stayed exactly where they were. The big changes landed on graduate students and parents, plus a new $257,500 lifetime ceiling across all federal student loans except Parent PLUS.
Undergraduate students
| Year in school | Dependent student | Of which subsidized | Independent student* |
|---|---|---|---|
| First year | $5,500 | Up to $3,500 | $9,500 |
| Second year | $6,500 | Up to $4,500 | $10,500 |
| Third year and beyond | $7,500 | Up to $5,500 | $12,500 |
| Total undergraduate limit | $31,000 | Up to $23,000 | $57,500 |
*The independent column also applies to dependent students whose parents are denied a Parent PLUS loan. Subsidized caps are the same for both columns.
Graduate students, professional students and parents
| Borrower | Yearly limit | Program or total limit | Loan type | What changed |
|---|---|---|---|---|
| Graduate student (most master’s, MBA, PhD) | $20,500 | $100,000 | Unsubsidized only | Grad PLUS closed to new borrowers |
| Professional student (medicine, law, dentistry, pharmacy and others) | $50,000 | $200,000 | Unsubsidized only | Program list under court review |
| Parent PLUS (per dependent student) | $20,000 | $65,000 | PLUS, credit-screened | Was up to full cost of attendance |
| All federal student loans combined | — | $257,500 lifetime | Excludes Parent PLUS | New lifetime ceiling |
Before July, a student taking nine credits often received the same annual loan as one taking fifteen. Now the school multiplies the annual limit by the share of full-time you’re taking. A student enrolled at three-quarter time across the year gets about three-quarters of the limit. Parent PLUS loans are exempt from this reduction. If you plan to drop a class after the loan is offered, ask the aid office first: some schools recalculate before disbursement, and a dropped class can trim money you already budgeted for.
What Each Loan Costs Right Now
Federal rates are set once a year from the May 10-year Treasury auction and stay fixed for the life of each loan. This year’s auction nudged every rate up slightly. Private rates move daily and depend almost entirely on credit.
| Loan | Who it’s for | Rate (first paid out July 1, 2026 – June 30, 2027) | Upfront fee | Credit check |
|---|---|---|---|---|
| Direct Subsidized | Undergrads with financial need | 6.52% fixed | About 1.06% | None |
| Direct Unsubsidized (undergrad) | Any undergrad, need not required | 6.52% fixed | About 1.06% | None |
| Direct Unsubsidized (graduate) | Graduate and professional students | 8.07% fixed | About 1.06% | None |
| Parent PLUS | Parents of dependent undergrads | 9.07% fixed | About 4.23% | Adverse history only |
| Private student loan | Students, often with a cosigner | About 2% to 18% APR, fixed or variable | Usually none | Full credit review |
We ran a second set of numbers that rarely makes it into lender marketing. Suppose a student borrows the full dependent maximum each year, $27,000 across four years, and none of it is subsidized. At 6.52%, interest that builds while they’re in school adds up to roughly $5,000 by graduation day, before a single payment is due. That is why the subsidized portion matters so much, and why paying even the monthly interest on unsubsidized loans during school, $20 or $30 at a time, pays off.
The Parent PLUS fee deserves its own sentence. On a $20,000 PLUS loan, roughly $846 comes off the top before the money reaches the school. Parents who need the full $20,000 to land on the bill have to borrow a bit more, and pay 9.07% on that extra too.
Estimate What a Loan Will Really Cost You
Enter an amount and loan type. The tool shows what actually reaches the school after the fee, the interest that piles up while you’re enrolled, a fixed monthly payment, and an estimate under the new income-based plan using a starting salary you expect.
Assumes in-school interest is added to the balance when repayment begins. The income-based estimate uses the Repayment Assistance Plan formula and does not apply to Parent PLUS or private loans.
We left the defaults at a $20,000 unsubsidized undergraduate loan, four and a half years until repayment, and a $48,000 first salary. The fixed 10-year payment lands near $294 a month once the in-school interest is added on, while the income-based estimate is about $160. That gap looks attractive, but the lower payment stretches repayment out and the balance shrinks slowly. Run your own figures with an honest salary for your field, not the best case.
When Federal Student Loans Aren’t Enough
With Parent PLUS now capped and Grad PLUS gone for new borrowers, more families will hit a real gap between aid and the bill. Here is how to pick the least expensive way across it.
| Feature | Parent PLUS (new loans) | Private student loan |
|---|---|---|
| Who owes it | The parent alone | Student, usually with a cosigner who owes it equally |
| Rate | 9.07% fixed for everyone | Credit-based; strong credit can beat PLUS by a wide margin |
| Fee | About 4.23% deducted upfront | Most charge none |
| Limit | $20,000 a year, $65,000 per student | Often up to cost of attendance minus other aid |
| Repayment options | Standard plan only, no income-based plan | Set by lender; some offer in-school deferment and hardship pauses |
| Death or disability | Discharged by law | Varies by lender; check the contract |
| Public service forgiveness | Not available on new PLUS loans | Not available |
How to apply for a Parent PLUS loan. The parent signs in at StudentAid.gov with their own account, completes the PLUS application for the specific school and year, and agrees to the credit check. The check looks only for adverse history, such as accounts 90 or more days late or a recent bankruptcy or default, not a score. If approved, the parent signs a separate PLUS master promissory note. The school then certifies the amount.
How to apply for a private student loan. Start with three or more lenders that offer prequalification with a soft credit check, which doesn’t affect scores. Compare APR, fixed versus variable, repayment term, whether payments are required while in school, and cosigner release rules. Then submit one full application. The lender asks the school to certify your enrollment and cost of attendance before it pays out, which takes a few days to a few weeks, so start at least a month before the bill is due. Many private lenders also give you a short right-to-cancel window after final disclosure.
A school’s tuition payment plan splits the semester bill into monthly installments, often with a small enrollment fee and no interest. For a gap of a few thousand dollars, that can beat any loan. And a written appeal to the aid office, with documentation of a lost job, medical bills, divorce or a death in the family, can raise a grant. Aid officers have the authority to adjust FAFSA figures when the tax year on the form no longer reflects reality.
Which Situation Sounds Like Yours?
The standard advice assumes an 18-year-old starting a four-year college with two parents who file taxes. Plenty of borrowers aren’t that student. These are the cases where the process changes.
This feels like a dead end, and it opens a door. When a parent is denied for adverse credit, the dependent student becomes eligible for extra unsubsidized loans: $4,000 more a year in the first two years and $5,000 more in later years, at the student rate of 6.52% with the smaller fee. Ask the aid office to add it once the denial posts.
The parent also has two ways to still get the PLUS loan: find an endorser, someone without adverse credit who agrees to repay if the parent doesn’t, or document extenuating circumstances. Both routes require completing PLUS credit counseling. Many families do better taking the student’s extra unsubsidized eligibility instead.
If you start a new program now, your only federal loan is unsubsidized, capped at $20,500 a year and $100,000 for the program, or $50,000 and $200,000 in a professional program. For many medical, law and dental programs the professional cap still falls short of the full cost, and for most master’s degrees above roughly $20,000 a year in tuition and living costs, there will be a gap.
Before you enroll, ask the program three questions: what its total cost of attendance is, how many students borrow privately, and whether the school has set its own lower loan limit, which schools are now allowed to do. Some programs are adding institutional loans or larger scholarships to fill the space Grad PLUS used to occupy. If you already had a federal loan disbursed for your current program before July 1, you keep Grad PLUS access for up to three years, but only if you don’t withdraw or switch programs.
This is the most unsettled corner of the new rules. The Department of Education’s spring rule limited the “professional” label, and the higher caps, to about a dozen fields such as medicine, law, dentistry and pharmacy. A federal court in Washington, D.C. stayed part of that definition in late June. While the stay lasts, the department is treating an expanded interim list, including several nursing degrees (MSN, DNP, nurse anesthesia), physician assistant, physical therapy and others, as professional. Nursing PhD students were not included.
The stay is temporary, and the litigation continues. The practical move: borrow based on what you’d need if the lower $20,500 limit came back, line up a private or institutional backup now, and ask your aid office every term which limit applies to your program code.
Students 24 or older are usually independent on the FAFSA, so parents’ income doesn’t count and the higher independent limits apply. The catch is the new proration: a working adult taking six or nine credits a term will now see a proportionally smaller loan. Check whether your employer offers tuition assistance; under current federal tax law, up to $5,250 a year in employer education help can be tax-free to you.
Short job-training programs, roughly 8 to 15 weeks, may now qualify for a Workforce Pell Grant if the program is approved, which can cover costs that loans couldn’t reach before. Ask the school whether its program is eligible.
If parents refuse to contribute information, a dependent student can still submit the FAFSA and get only unsubsidized loans, at the dependent limit, with no grants. That’s a big loss, so it’s worth trying the aid office first. If you’ve left home because of abuse, abandonment or a similar situation, the school can grant a dependency override after reviewing your circumstances, and homeless youth can be treated as independent with documentation from a shelter, school liaison or caseworker.
A borrower in default generally cannot get new federal aid until the default is resolved, and that includes a parent seeking a PLUS loan. This matters more right now: Education Department data show more than nine million borrowers in default, and the Treasury Department has taken over collecting those debts, with a new online portal for resolving them and reports that private collectors may be brought in. Getting back on track through rehabilitation or consolidation restores eligibility. Start that process months before the semester, not weeks.
U.S. permanent residents and certain other eligible noncitizens can get federal student loans. Students without eligible status, including many DACA recipients, can’t, though some states fund their own aid for them and many still benefit from filing a state application. International students usually need a private loan with a U.S. citizen or permanent resident cosigner, or a lender that specializes in international borrowers. A U.S.-citizen student whose parent lacks a Social Security number can and should still file the FAFSA.
A cosigner owes the full debt, not a backup share of it. Late payments land on both credit reports, and the balance counts against the cosigner’s own debt ratios when they apply for a mortgage or car loan. Before signing, ask the lender how cosigner release works, usually after a set number of on-time payments and a credit check of the student alone, and what happens to the loan if the cosigner dies. Get statement access so trouble isn’t a surprise.
Your Repayment Choice Starts the Day You Borrow
Anyone taking out a new federal loan now gets two repayment plans. Even if repayment is years away, how they work should shape how much you borrow today.
| Plan | How payments are set | Length | Good fit for | Watch for |
|---|---|---|---|---|
| Tiered Standard | Fixed payment that fully repays the loan | 10 years under $25,000; 15 years to $50,000; 20 years to $100,000; 25 years above | Steady earners who want the debt gone | Not a qualifying plan for public service forgiveness |
| Repayment Assistance Plan (RAP) | 1% to 10% of adjusted gross income, minus $50 a month per dependent, minimum $10 | Up to 30 years, then remaining balance forgiven | Lower incomes, public service careers | No cap: high earners can pay more than standard |
| Parent PLUS (new) | Tiered Standard only | 10 to 25 years by balance | — | No income-based option at all |
The income-based plan has two features that older plans lacked. If your payment doesn’t cover the month’s interest, the unpaid interest is waived, so the balance can’t balloon. And if your payment cuts the principal by less than $50, the government adds a matching amount so the balance still drops by $50. For a new teacher or nurse heading into public service forgiveness, those protections are valuable. You can switch between the two plans after repayment begins.
Two other protections are narrowing. For loans made on or after July 1, 2027, the unemployment and economic hardship deferments go away and forbearance becomes more limited. Borrowing this year still keeps those, but anyone taking loans next year and beyond should treat an emergency fund as part of the plan.
Borrowers whose loans were all made before July 1, 2026 can stay on most existing plans, such as Income-Based Repayment, for now. If you take out even one new federal loan, all of your loans, old and new, move to the two new repayment choices. For someone counting on an older plan’s terms, that’s a reason to price a private loan or a cheaper program before signing a new federal note.
When Something Goes Wrong
Most loan application problems fit a handful of patterns, and almost all have a next move.
| What happened | Likely reason | Do this first | Then |
|---|---|---|---|
| FAFSA stuck as “incomplete” | A contributor hasn’t signed or consented | Check each contributor’s status in the student’s account | Resend the invitation; confirm account details match SSA records |
| No loan appears on the aid offer | School hasn’t packaged, or verification is open | Look for outstanding tasks in the school portal | Call the aid office and ask what’s pending |
| Loan smaller than expected | Part-time proration or a school-set limit | Ask how the amount was calculated | Adjust credits or plan for the gap |
| Parent PLUS denied | Adverse credit history | Ask the school to add the student’s extra unsubsidized eligibility | Endorser or appeal if the parent still wants PLUS |
| Private loan declined | Thin credit or high debt-to-income | Add a creditworthy cosigner | Try a credit union or state-based lender |
| Funds haven’t arrived | MPN or counseling missing, or enrollment below half-time | Check StudentAid.gov for both items | Ask the bursar about a late-fee waiver while aid processes |
| Borrowed more than needed | Accepted the full offer | Return it within 120 days of disbursement | No interest or fee is charged on what you return in time |
The FAFSA and federal loan applications are free, and the official site ends in .gov. Companies charging to “file your FAFSA” or “secure your federal loan” add nothing you can’t do yourself, and some harvest StudentAid.gov passwords. Never share your account login with anyone, including a lender or a consultant. Free help is available from your school’s aid office and the federal information center.
The Education Department has been moving pieces of student aid to other agencies, starting with Treasury taking over collection of defaulted loans this year, and there are reports of plans to shift more. For a new borrower, the application process described here is unchanged: you still apply through StudentAid.gov and your school. Keep your contact information current there, save copies of your MPN and loan disclosures, and read any notice about a servicer change carefully, since your loan terms don’t change when the servicer does.
Our Verdict
You’re an undergraduate or graduate student who still has a gap after grants and scholarships. Student federal loans need no credit, no cosigner, carry fixed rates and come with income-based repayment and discharge protections that no private lender matches. File the FAFSA now, as early as you can, and accept only what the bill requires.
Federal student loans are maxed out and a parent or cosigner has strong credit. With PLUS at 9.07% plus a 4.23% fee and no income-based repayment on new loans, a well-qualified family can often save real money privately. Get soft-pull quotes from at least three lenders and compare total cost.
The gap is so large that you’d need private loans every year on top of maximum federal borrowing, or the expected salary in your field wouldn’t comfortably cover the payment shown in the tool above. A cheaper school, a community college start, a part-time job or a different program can save more than any interest rate.
Questions people still ask
How long does it take to get a federal student loan?
The FAFSA itself can take under an hour once accounts are set up. The loan arrives when your school disburses it, usually around the start of the term, provided you’ve accepted it, signed the MPN and finished entrance counseling.
Do I need to file a new FAFSA every year?
Yes. Aid is awarded one year at a time, so you file for each school year you want aid. Your master promissory note usually carries over at the same school.
Can I get a student loan without my parents’ information?
If you’re independent, yes. If you’re dependent and your parents refuse, you can still get unsubsidized loans only. If you’ve left home because of abuse or abandonment, ask the aid office about a dependency override.
Can I use student loans for rent and food?
Yes, up to your school’s cost of attendance, which includes housing, food, books, transportation and personal costs. Any loan money left after tuition and fees is refunded to you for those expenses.
Should I pick a fixed or variable private loan?
Fixed rates keep payments predictable for the life of the loan. Variable rates may start lower but can rise. If you’ll repay over many years or have a tight budget, fixed is usually the safer choice.
Does the federal autopay discount still exist?
Federal servicers have long offered a 0.25 percentage point rate reduction for automatic payments. Ask your servicer when repayment begins, and most private lenders offer a similar discount.
How this page was checked. Federal interest rates, fees, loan limits, Pell Grant amounts and FAFSA dates come from Federal Student Aid and Department of Education guidance for the current and upcoming award years. Changes taking effect July 1, 2026 reflect the One Big Beautiful Bill Act and the department’s final loan regulations, cross-checked against university financial aid office guidance. Professional degree program status reflects the department’s interim list issued under a federal court stay, which may change. Private loan rate ranges are based on lenders’ advertised APRs in October and change daily. Payment and interest examples are our own calculations and exclude fees unless stated.
This page is independent and is not affiliated with any lender, school or government agency. It is general information, not legal, tax or financial advice.
Key sources: Federal Student Aid (StudentAid.gov) · U.S. Department of Education · Consumer Financial Protection Bureau · Federal Trade Commission