College  |  July 20, 2022  |  Ashley Boucher

Types of College Loans: Federal & Private Student Loans

What you'll learn
  • The various types of college loans available to students
  • What each type of college loan can be used for
  • What are the eligibility requirements for college loans

So, you want to know how to pay for college? Well, first let me say, congratulations on deciding to pursue your education! College can be a great boost to your professional career, your social experience, and your self-esteem. Now that you’ve decided to take on this proven path to upward mobility, it’s time to figure out how to pay for it.

The cost of college

According to Sallie Mae’s “How America Pays for College 2021”, families spent, on average, $26,373 on college last year. Covering those costs came with a unique formula for each family – many used funds from a combination of savings and income, scholarships and grants, student loans, or even gifts from family and friends.

The cost of college is definitely a hot button issue, but the value is evident. According to “How America Pays for College,” more than 8 in 10 families believe having a college degree will help their student get a higher paying job, and 7 in 10 students and parents say the price of college is either a bargain, worth every penny, or appropriately priced.

Regardless of your take on the cost of college, if you’re headed there, you’ll need to know how to pay for it. More than half of American families borrow, and of those, 6 in 10 say it was always a part of their plan.

If you’re planning to borrow for college, knowing which options are available to you is a good place to start.

Tip: Not sure how you’ll pay? Check out this free College Planning Calculator for assistance.

Requirements Necessary For Applying for Graduate PLUS Loans

If this sounds like a good fit to help finance your future, your next question may be ‘am I eligible for a Graduate PLUS loan?’

To apply for and receive a Graduate PLUS Loan, you must meet the following requirements:

  • You’re a graduate or professional student enrolled at least half-time at an eligible school in a program leading to a graduate or professional degree or certificate.
  • You don’t have an adverse credit history (unless you meet certain additional eligibility requirements). This means you have no student loan defaults, no long-term delinquencies, and no bankruptcies on your credit report.
    • If you do have a challenging credit history, consider applying with a cosigner—but remember, the cosigner is legally responsible for repaying your loan if you’re not able to do it. (If you have a potential cosigner who isn’t sure what it means to cosign on a student loan, this can help: 7 Things You Should Know About Cosigning a Student Loan.)
  • You meet the general eligibility requirements for federal student aid, including being a U.S. citizen or eligible non-citizen, having a Social Security number, and making satisfactory academic progress.

How to Apply for a Grad PLUS Loan

TOnce you determine that you meet these criteria, it’s time to complete the FAFSA®. Completing the FAFSA® isn’t just for high school seniors and undergraduates—grad students should file it, too, in order to qualify for various forms of aid, including scholarships and grants, work-study, and federal student loans.

Once you’ve filed the FAFSA®, you can start a Grad PLUS Loan application. The average Graduate PLUS Loan application takes about 20 minutes, and you’ll need to provide your verified FSA ID (which is a username and password created to file the FAFSA®), your school’s name, your permanent mailing address, your U.S. address (if your permanent address is outside of the U.S.), your telephone number and email address, and if applicable, your employer’s information.

If you’re eligible for the Grad PLUS Loan, you’ll need to agree to the terms of the loan by signing a Master Promissory Note. You may also need to complete entrance counseling.

What Does a Graduate PLUS Loan Cover?

The Graduate PLUS Loan can cover the full cost of attendance for your graduate program, with the exception of other financial aid received—like scholarships, fellowships, grants, etc. There is no aggregate loan limit.

The cost of attendance includes

  • Tuition and fees
  • Room and board
  • Books and supplies
  • Technology and equipment
  • Transportation
  • Miscellaneous and personal expenses

Key Benefits of the Federal Direct Grad PLUS Loan

There are benefits to a Graduate PLUS Loan, similar to benefits offered for other federal student loans. For example, Grad PLUS loans come with a fixed interest rate that won’t go up (or down) during the life of your loan.

In addition, loan payments can be postponed while you’re in school, as long as you’re enrolled at least half-time at an accredited program, and for an additional six months after you’ve left school or dropped below half-time status.

Graduate PLUS Loans have multiple repayment plans available and the interest you pay on your loan can be tax deductible.


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Alternative Options to Pay for Your Graduate Degree

When it comes to paying for grad school, federal student loans are a good resource. Before you take out student loans, though, explore money you don’t have to repay, like scholarships, grants, fellowships, and assistantships.

Use online tools, like the free Graduate School Scholarship Search, to connect you to scholarships specifically designed for grad students. After you’ve maximized money you don’t have to pay back and explored federal student loans, you still may need additional funds.

That’s when a private student loan may make sense. Most private student loans don’t have an origination fee, and some offer expanded repayment terms, so they could be a competitive option.

Whatever methods you choose to finance your graduate degree, you can rest assured you’re making an investment in your future.


Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Sallie Mae makes no claims about the accuracy or adequacy of this information. These materials may not reflect Sallie Mae’s view or endorsement. Consult your own attorney or tax advisor about your specific circumstances. Reproduction without explicit permission is prohibited.

External links and third-party references are provided for informational purposes only. Sallie Mae cannot guarantee the accuracy of the information provided by any third parties, and Sallie Mae assumes no responsibility for any errors or omissions contained therein. Any copyrights, trademarks and/or service marks used in these materials are the property of their respective owners.

You must apply for a new loan each school year. This approval percentage is based on students with a Sallie Mae undergraduate loan in the 2018/19 school year who were approved when they returned in 2019/20. It does not include the denied applications of students who were ultimately approved in 2019/20.