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The thrill of opening college acceptance letters and sitting down to decide where to spend the next four years is undeniably special. After making such an exciting decision, making logistical ones may not seem as appealing, especially when it comes time to choose a student loan to help pay for college.

The expense of attending college can be intimidating, but fortunately student loans can help make financing college more manageable. Broadly, students can borrow federal student loans or private student loans to help pay for their education. For the most part, students will rely on a combination of funding, including loans, scholarships, grants, and work-study to pay their way through college. There are a lot of student loan options that may be accessible to students, and it’s worth considering all viable options before making a decision.

Are You Eligible for Federal Student Loans?

Federal student loans are available for students who meet the general eligibility criteria as outlined by the U.S. Department of Education. In addition to demonstrating financial need (for most programs), students must be a citizen of the U.S. or eligible non-citizen in order to apply. Additionally, students need to be enrolled at least half-time in an eligible degree-granting institution.

Types of Federal Loans You Can Get

The U.S. Department of Education issues loans through the William D. Ford Federal Direct Loan (Direct Loan) Program, and each loan has unique benefits and eligibility requirements. They offer four types of direct loans.

1. Direct Subsidized Loans: For eligible undergraduates who demonstrate financial need to help cover the costs of receiving a higher education at a college or career school.

2. Direct Unsubsidized Loans: For eligible undergraduate, graduate, and professional students. Need is not a determining factor.

3. Direct PLUS Loans: For graduate or professional students and the parents of dependent undergraduate students. These loans help pay for education expenses that other forms of financial aid did not cover. This is not a loan based on financial need but requires a credit check, and certain credit history standards must be met to qualify.

4. Direct Consolidation Loans: These loans allow students to combine all of their eligible federal student loans into just one loan serviced by a single loan servicer.

Students may not be eligible for each of these loan types, but the information provided on the SAR is used by college financial aid offices to determine what financial aid to offer to a student. Researching each option carefully before deciding which loan to choose can be a helpful and responsible step to take.

Recommended: Subsidized vs. Unsubsidized Loans: What is the Difference?

How to Apply for a Federal Loan

In order to qualify for federal student loans, students must complete the Free Application for Federal Student Aid (FAFSA®) form. The process is relatively easy and straightforward.

Filling out the FAFSA form will require personal information about the student and their financial circumstances. The following information or documents may be necessary to help fill out the application.

•   Student’s Social Security number.

•   Parents’ Social Security numbers, for dependent students.

•   Student’s driver’s license number, if applicable.

•   An Alien Registration number for non-US citizens.

•   Information regarding federal taxes and tax returns for the student or, for dependent students, their parents.

•   Records of untaxed income for students or, for dependent students, their parents.

•   Information regarding liquid assets, investments, and business or farm assets of the student or, for dependent students, their parents.

FAFSA forms completed online take three to five days to process, while paper applications require seven to 10 days. Post-processing, the student will receive their Student Aid Report (SAR), which summarizes the information provided on the FAFSA, so it’s important to review this report to ensure its accuracy. If a mistake is found, students should correct their FAFSA as soon as they can.

The SAR includes the Student Aid Index number (SAI), which helps colleges determine eligibility for the Federal Pell Grant and other federal and nonfederal student aid such as gift aid and federal student loans.

The Pell Grant is a federal grant awarded to undergraduate students who demonstrate exceptional financial need.

The colleges the student submitted the FAFSA to are responsible for creating their award package and distributing their financial aid. Contacting the financial aid office at each college a student is considering is advisable, as each college may have a unique process for applying for aid.

Each year, the student can renew their FAFSA form using their FSA ID which will allow them to skip some of the more basic questions on the form.

How to Accept a Federal Loan

When the student aid office at your school sends an aid offer, it will include an option for you to select which types of aid you would like to accept or reject. To do this, follow the instructions provided by your financial aid office. If you have any questions, contact the financial aid office at your school.

Generally speaking, aid that does not need to be repaid, such as scholarships or grants, should be prioritized over loans, which will need to be repaid.

What if Your Federal Loans Aren’t Enough?

If your student loans aren’t enough to pay for college, you have a couple of options. One is to explore scholarships and grants from your school or local community. This guide to unclaimed scholarships has information on finding additional free money to help you pay for college.

Another option is to look into borrowing a private student loan. Federal and private student loans have a few important distinctions. Federal student loans are provided by the United States government, whereas private loans come from private lenders.

More specifically, federal student loans have terms and conditions that are pre-determined by law. Federal student loans have benefits that private lenders are not guaranteed to offer, such as having fixed interest rates and offering income-driven repayment plans. For this reason, federal student loans are generally prioritized over private student loans when students are creating a plan to finance their education.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Understanding Private Student Loans

Private student loans can be found through private organizations like a bank or credit union, as well as certain state-based or state-affiliated organizations. The lender will set the terms and conditions, and these types of loans are typically more expensive than federal ones.

Interested students will apply for private student loans directly with the lender of their choice. When applying for private loans, it’s important to understand any credit requirements. Most federal student loans don’t require a credit check, but private lenders often require a minimum credit score and income, and typically want to see a history of on-time loan repayments.

Using a co-signer with a more established credit history — which most students don’t have — can make qualifying for a private undergraduate loan easier. The co-signer will have to assume responsibility for the loan if the student misses payments. This private student loan guide has even more detailed information.

How to Pick a Private Student Loan Lender

Most private lenders will allow you to find out if you prequalify for a loan and at what terms and interest rates. This can allow you to effectively compare interest rate types (fixed vs variable), the interest rate amounts, repayment options, loan terms, hardship options, and any perks or discounts the lender may offer before making a final decision.

Once you have selected a preferred lender, you can fill out a formal application. At this point, the lender will conduct a hard credit inquiry (which may impact your credit score).

Determining How Much to Borrow

Determining what to look for when picking a student loan will vary greatly by the student’s financial and educational needs, including how much to borrow. When it comes time to choose how much money to borrow through student loans, the amount will depend on what types of loans the student chooses. For example, federal student loan amounts vary greatly.

•   Undergraduate student loans borrowed through Direct Subsidized Loans and Direct Unsubsidized Loans range from $5,500 to $12,500 per year, varying by what year of school the student is in and their dependency status.

•   Graduate and professional students can borrow up to $20,500 annually in Direct Unsubsidized Loans. These funds can also help cover the remainder of college costs not covered by other financial aid.

•   Parents of undergraduate students can utilize a Direct PLUS Loan to cover the remainder of their child’s education costs that financial aid didn’t cover.

Which of these options a student and their family pursues will vary based on how much financial aid they receive and how much of their education costs they want to cover out of pocket.

Typically, students and their families turn to private student loans if their federal financial aid and loan options don’t cover all of their academic expenses. To determine how much in private loans to take out, students should aim to cover the following expenses for the entire school year: tuition, fees, housing, food, textbooks, school supplies, and travel.

To find the final amount required in private student loan funding, students can subtract any money they’ve received from gift aid such as scholarships and grants, financing they will receive from work-study programs, any college savings they or their families have, and whatever federal loans they received.

Private Student Loans With SoFi

In addition to banks and credit unions, students can turn to online lenders for private student loans. SoFi offers private student loans that students can apply for from the comfort of their own homes in a quick and easy online application. Students can choose what type of interest rate they prefer and can add a cosigner, if necessary.

They never have to worry about fees — that means zero origination, late, and insufficient fund fees. SoFi student loans can cover the entire cost of attendance, so students can take a deep breath and focus on hitting the books instead of worrying about paying for school.

Learn more about SoFi’s easy application process and flexible repayment plans.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you took out a Direct PLUS Loan for Parents to help fund your child’s education, you’re going to eventually have to start paying the money back. Parent PLUS loans generally can’t be transferred to your child — even once they graduate and get a steady job — so you’re the one who’s on the hook for paying them off in full. That prospect can be daunting, since this may be your largest chunk of debt outside of a mortgage.

Fortunately, there are a number of ways to delay payments on parent PLUS Loans, or make them more affordable. Unfortunately, sorting through — and trying to understand — all the various deferment and repayment plans can be overwhelming. Not to worry. What follows is a simple guide to repayment options for Parent Plus loans.

Starting Repayments — and Pausing Them if You Need To

Unlike some other federal student loans, Parent PLUS Loans do not have a grace period — a six-month break after the student graduates, or drops below half-time enrollment, before payments are due. Instead, their repayment period typically begins once the loan is fully disbursed.

The idea behind the delay with other student loans is that it gives your child a chance to get settled financially. The federal government assumes you, as a parent, don’t need the same accommodation.

If you’re not ready to start paying, you have a couple of options for pausing repayment on your Parent PLUS Loan:

1.    Apply for deferment. Your first payment on a parent PLUS loan is typically due once the loan is fully paid out, often after the spring semester. However, you can opt to defer Parent PLUS loan payments while your child is enrolled at least half-time and up to six months after they graduate or drop below half-time enrollment. To do this, you simply need to apply for a deferment with your loan servicer. Just keep in mind that interest will still be piling up, even if you’re not making payments. If you don’t pay the interest during this period, it will be capitalized (i.e., added to the loan principal) when the deferment is over, which can increase how much you owe over the life of the loan.

2.    Request a forbearance. If your child is already more than six-months post graduation, you may still be able to temporarily stop or reduce what you owe by requesting a forbearance . To be eligible for forbearance, however, you must be unable to pay because of financial hardship, medical bills, or a change in your employment situation. The amount of forbearance you can receive for your payments depends on your situation. Interest will still accrue during this period, but if you’re going through a temporary financial difficulty, it may be worth approaching your loan servicer for a forbearance rather than risking missed payments.

💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

Parent PLUS Loan Repayment Options

You typically can’t put off payments forever. Depending on the repayment plan you choose, you will have between 10 and 25 years to pay off the loan in full. However, you have three different repayment options to choose from. Here’s a closer look at each plan.

Standard Repayment Plan

One of the most straightforward options is the standard repayment plan. In this scenario, you will pay the same fixed amount each month and pay the loan in full within 10 years. The benefit is that you always know how much you owe and you’ll accrue less interest than with most other plans, since you’ll be repaying the loan in a faster time frame.

The difficulty is that this results in monthly payments that may be too high for some people. It’s a good option if you can afford the payments and you don’t expect your situation to change in the next ten years.

Recommended: 6 Strategies to Pay off Student Loans Quickly

Graduated Repayment Plan

With the graduated repayment plan, you will also pay off your loan within 10 years. However, the payments will start out smaller and then gradually increase, usually every two years. You’ll pay more overall than under the previous plan because you’ll accrue more interest, but less than if you were to sign on for a longer repayment term. This plan can be a good option if you expect to earn more in the relatively near future.

Extended Repayment Plan

A third choice is the extended repayment plan, which spreads payments out over 25 years. You can either pay the same amount every month, or have payments start out lower and ramp up over time. You’ll end up paying more over the life of the loan because you’ll be racking up interest over a longer time period. However, this payment plan can be a good way to make monthly payments more affordable while knowing you are on track to pay off the loan in full.

💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Loan Forgiveness for Parent PLUS Loans

Parent PLUS borrowers don’t have as many opportunities for loan forgiveness as students do. And, the newly introduced changes to income-driven repayment (IDR) plans, called SAVE, won’t help you. However, there are other options to get debt relief for parent PLUS loans. Here are two to consider.

Income-Contingent Repayment Plan

You do have one option for tying payments to your income, but you have to jump through one hoop first — you’ll need to consolidate your Direct PLUS loans into a Direct Consolidation Loan . You can (and will need to) do this even if you only have one Parent Plus loan.

A Direct Consolidation Loan combines any existing federal Parent loans into one and may change your monthly payment, interest rate, or the amount of time in which you have to repay the loan. You can’t, however, consolidate Direct PLUS Loans received by parents to help pay for a dependent student’s education with federal student loans that the student received.

Once you consolidate, you may be eligible for the Income-Contingent Repayment (ICR) Plan. Under this plan, your monthly payment would be no more than 20% of your discretionary income for 25 years. After that time, any remaining debt is forgiven.

The ICR plan can potentially lower the required monthly payment to an affordable level. Depending on your income, you can potentially get a payment as low as $0.

Public Service Loan Forgiveness

Another way you might be able to get your loans forgiven is by signing up for Public Service Loan Forgiveness (PSLF). You might qualify if you work in a public service job, including for a government organization, nonprofit, police department, library, or early childhood education center. Note that you are the one who has to work in this field, and not the student.

To be eligible for PSLF, you’ll need to first consolidate your Parent PLUS loans (or loan) into a Direct Consolidation Loan and start repayment under the ICR Plan. Once you make 120 qualifying payments on the new Direct Consolidation Loan, your loan may be forgiven (prior Parent Plus Loan payments do not count towards 120 payments required for PSLF).

Considering Student Loan Refinancing

If you’re looking for another way to tackle your Parent PLUS loan, you may want to consider refinancing your Parent Plus loan with a private lender. This involves taking out a new loan and using it to repay your current Parent PLUS Loan.

Refinancing your PLUS loan can potentially reduce the total interest you pay over time, lower your monthly payment, and/or help you get out of debt faster. Note: You may pay more interest over the life of the loan if you refinance with an extended term. Depending on the lender, you may also have the option to transfer the debt into your student’s name.

When you apply for a parent PLUS loan refinance, the lender will conduct a credit check and look at your income and other debts to determine if you qualify for a refinance and at what rate. Generally, the better your credit, the cheaper the loan will be. In fact, if you have exceptional credit, your interest rate could be substantially lower than what the federal government originally offered you. Keep in mind, however, that when you refinance a federal student loan with a private lender, you are no longer eligible for federal student loan benefits, such as forgiveness or forbearance.

The Takeaway

By taking out a Parent PLUS loan, you are generously supporting your child’s dream of getting a college education and launching a successful career. But that doesn’t mean that loan payments need to become a burden for you. If you learn about your options for reducing or managing payments, you’ll be on track to paying off your loan with peace of mind.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

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SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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