Finding the best student loans for your education

How to pick the student loan for you

Most families can’t pay the entire cost of college on their own; after using savings, scholarships, and grants, you may need to take out a student loan. There are different types available, so it’s important to know how to choose the best student loan for you. Here are some basic facts and tips to help you borrow responsibly for college.

Types of student loans

There are two major types of education loans: federal loans (issued by the government and overseen by the Department of Education) and private loans (from banks and other financial institutions).

One thing these loans all have in common is that you’ll need to pay them back after you leave school (whether you graduate or not), and interest will be added to your loan.

Federal vs private student loans

Here's what you need to know about federal and private student loans—including what they are, how they differ, and how to apply—so you can make the right choice for your goals.

Federal student loans

Federal student loans offer reliable funding that is distributed directly from the government. To be eligible for federal student loans you have to fill out the Free Application for Federal Student Aid (FAFSA^®) each year you’re in school. You’ll find out how much you’re approved for in the financial aid offer you get from each school.

There are two types of federal loans for undergraduate students—direct subsidized and direct unsubsidized. Direct Subsidized Loans are for students with demonstrated financial need, as determined by federal regulations. Direct Unsubsidized Loans aren’t based on financial need. Your school determines the amount you can borrow based on the cost of attendance and other financial aid you receive.

The third type of federal loan is PLUS loans—available for graduate students and parents. These loans, also known as Direct PLUS Loans, are credit-based and provided directly to graduate students and parents of dependent students.

Note: Changes to PLUS loans go into effect on July 1, 2026. Our PLUS loan guide breaks down the updates to help you plan for what’s next. 

Benefits and drawbacks

Here are some things to note about federal student loans.

• Flexibility: Undergraduate federal student loans can offer more flexibility in repayment (like income-driven repayment plans, where the monthly amount is based on your salary after college) than private ones.
• No credit check: The government won’t check your credit. So, whether it’s good, bad, or non-existent, you can still be eligible for federal loans. You won’t need a cosigner. (PLUS loans, however, require a credit check.)
• Standard interest rate: Federal student loans have fixed interest rates, meaning they stay the same through the loan term. Unlike variable rates, which can change based on economic conditions, fixed rates provide predictable payments. Depending on the economy, one may be more beneficial than the other.
• Specialized forgiveness plans: If you’re planning to teach, work in government, or work in other public service sectors, you may be able to have the government forgive your federal student loans—but there are very strict regulations that need to be followed.

Private student loans

Private student loans are issued by banks, credit unions, and other financial institutions. These loans can help you pay for college once you’ve maxed out your scholarships, grants, and federal student loans. Not all private student loans are the same, so be sure to do your research.

Benefits and drawbacks

Here are some things to note about private student loans.

• Credit-based: This means the lender will evaluate your credit history, among other factors. Since many students haven’t built up their credit, a creditworthy cosigner can help them get approved.
• Options: You can generally decide how you want to make payments—in-school or after you leave—and whether you want a fixed or variable interest rate.
• Programs to lower your total cost: Some private loans offer benefits that can lower your total cost—like a discount when you sign up for auto-debit.
• Repayment: Unlike federal loans, you generally can’t change the repayment plan that you choose when you first get a private student loan.

5 Tips to find the best student loan for you

1. Consider financial aid first. Fill out the FAFSA^® each year to apply. There may be a borrowing limit to federal loans; if you need more, consider a private student loan. 
2. Compare your options. Private lenders may offer different interest rates, fees, benefits, and ways to save money on your loan. Check out their websites to get the info you need.  
3. Learn the lingo. You may come across new words like interest rate, cost of attendance, principal, and more. Like any new topic, understanding these terms will make it easier to make a decision.
4. Think about life after graduation. Will you be able to handle your monthly loan payments after you leave school? A student loan calculator can give you a starting point.
5. Ask around. Chat with older siblings, relatives, or friends in college about their loan experiences. Your school counselor or financial aid office can also help. Don’t be afraid to ask questions if you don’t understand something.

Need a loan for college?

Start with submitting the FAFSA^® to see what federal student loans you qualify for. If that’s not enough, look into private student loans and find the right option for you. A little research goes a long way in picking the loan that works best for you now—and in the future.