Funding Your Education: A Guide to Taking Out Student Loans
Navigating and understanding the student loans originations process can be difficult or overwhelming for students, parents, and guardians. Below you’ll find some helpful information that may provide some guidance while making the best decision for funding your educational journey.
Free application for Federal Student Aid (FAFSA)
- Required for any parent, guardian, or student seeking to take out federal student loans
- Might need to include financial documentation including but not limited to:
- Tax returns
- Current balances of cash, savings, and checking accounts
- Net worth of investments, farms, and businesses
- Has strict deadlines for submissions and adjustments
Federal student loan interest rates
- Interest rates are fixed, which means they won’t change unless they are consolidated into a new loan.
- Federal Student loan interest rates are subject to change every July 1:
- July 1, 2025, until June 30, 2026: Undergraduate Direct Subsidized and Unsubsidized Loans: 6.39%
- July 1, 2025, until June 30, 2026: Graduate and Professional Direct Unsubsidized Loans: 7.94%
- July 1, 2025, until June 30, 2026: Graduate Plus and Parent Plus Loans: 8.94%
Federal student loan fees
- The percentage of the loan amount will be proportionately deducted from each loan disbursement.
- All loans disbursed on or after October 1, 2020, will have a set fee percentage:
- Direct Subsidized and Unsubsidized Loans: 1.057%
- Graduate Plus and Parent Plus Loans: 4.228%
Current federal borrowing limits in effect until July 1, 2026, due to the One Big Beautiful Bill Act
New federal borrowing limits effective July 1, 2026, due to the One Big Beautiful Bill Act
- Undergraduate limits are not changing.
- Lifetime federal student loan cap is $257,500 (excludes Parent PLUS and Direct PLUS Graduate Loans).
- Net new Graduate and Professional PLUS Loans will no longer be available for students.
- Students enrolled in a full-time program prior to July 1, 2026, have a 3-year grace period to complete their program under the previous limits. If not completed during the grace period, they are subject to the new borrowing limits.
Private student loans
- Available for parents, guardians, or students.
- Interest rates can be fixed or variable.
- If they are fixed, then they won’t change unless they are refinanced into a new loan.
- If they are variable, they could either increase or decrease, which is subject to the terms of the loan and lender.
- When credit score is being reviewed, if there isn’t an established credit history, a cosigner may be required.
- The lender will determine eligibility on postponement of payments and adjusting the monthly payment.
- Cannot be refinanced into a federal student loan but may be able to be refinanced into a new private student loan.
Explore your options with an expert guide
Have questions about funding your education? Our student loan specialists can help you. Schedule a free 30-minute consultation to get started, learn more here.