Student Loan Guide: Federal vs Private

Federal student loans are fixed-rate and income-based — in 2025, undergrad Direct Loans are 6.53%, grad loans are 8.08%, and PLUS loans are 9.08%. Private loans can be lower for excellent credit borrowers but lack federal protections.

Always exhaust federal loan eligibility (FAFSA) before borrowing privately. Federal loans qualify for income-driven repayment plans (PAYE, SAVE) that cap payments at 5%–10% of discretionary income and offer forgiveness after 10–25 years.

• Undergrad annual limit: $5,500–$7,500 (dependent) or up to $12,500 (independent)
• Graduate annual limit: up to $20,500 (unsubsidized Direct)
• PLUS loans: up to cost of attendance minus other aid
• Public Service Loan Forgiveness: 10 years of payments for government and nonprofit employees