Student Loan Types
There are many types of student loans and it can get confusing quick. There are three federal student loan programs that are each designed for different types of students. To complicate matters further, there are multiple types of private loans. Below is a cheat sheet to help you choose.
Federal Direct Subsidized and Unsubsidized Loans
Subsidized Federal Loans
Subsidized federal loans are only for undergraduate students with demonstrated financial need. With these loans, the federal government pays accruing interest while you're enrolled in school.
These have limits and strict eligibility rules that you can find out more about from Experian.
Learn more about subsidized loans on Experian →Unsubsidized Federal Loans
Unsubsidized loans are available to all students but also have borrowing limits and the interest is fixed and accrues immediately.
There are also special loans for Grad and Parent borrowers.
Grad PLUS vs. Parent PLUS, quickly
These two get confused constantly. Here's the actual difference.
Who borrows
Grad PLUS was for grad and professional students borrowing for their own education. Parent PLUS is for parents borrowing on behalf of a dependent undergrad.
Status
Grad PLUS has been eliminated for new borrowers. Parent PLUS is still around, now capped at $20,500 a year and $65,000 total per student.
Who owes the money
The person who signs is the person who owes it. A parent's Parent PLUS balance never transfers to the student, even after graduation.
Eligibility
Both require a credit check. Neither is based on financial need.
Private Student Loans vs. Federal
A private lender might offer a fixed rate in the mid-4% range to a borrower with strong credit. On a $10,000 loan over 10 years, the gap between a 6.52% federal rate and a 4.25% private rate adds up to roughly $1,345 in extra interest. For grad borrowers, the gap is wider still, since federal grad rates start nearly two points higher than undergrad.
The bottom line
“Federal loans are easier to qualify for. Private loans can be cheaper, if your credit supports it. Know which situation you're actually in before you sign anything.”
Looking for a deeper dive?
Experian provides detailed breakdowns on student loan programs, credit qualifications, and repayment options.
Ready to explore your options?
Use our step-by-step calculator to find your exact borrowing limits and explore your options under the 2026 rules.
Sources:Experian; U.S. Department of Education, Federal Student Aid; The Institute for College Access & Success (TICAS)