Federal Student Loans
What the different loans are, what changed for 2026-27, and how to borrow only what you need.
Sometimes grants and savings are not enough to cover college. That is where loans come in. Federal student loans are loans from the government. You pay them back later, after school. Unlike grants, loans are not free money. But federal loans are usually a smart choice if you must borrow.
You get federal loans by filing the FAFSA. There is no extra form to fill out. When you submit your FAFSA, your school tells you which loans you can take and how much. So filing is step one. After you file, your school sends an award letter that lists your loan options. Learn what comes next on our after you file page.
Subsidized vs unsubsidized loans
There are two main kinds of student loans. They sound similar, but one is better for you. Here is the difference in plain words.
Why does this matter? With a subsidized loan, you owe less by the time you graduate, because the interest did not pile up. With an unsubsidized loan, the interest builds from day one. If you have a choice, take the subsidized loan first. It is cheaper over time.
Subsidized loans go to students with financial need. Unsubsidized loans are open to more students, no matter their need. Many students end up with some of each.
The new Parent PLUS loan caps
Parents can also borrow to help pay for their child's school. This is called a Parent PLUS loan. For 2026-27, there are new limits for parents who are borrowing for the first time.
What does this mean for your family? In the past, parents could borrow up to the full cost of college through Parent PLUS. Now there is a ceiling. The yearly limit is $20,000 for each student. The lifetime limit is $65,000 for each student. If you have more than one child in college, each child has their own limits.
These caps push families to plan ahead. If college costs more than these loans can cover, you will need other money, like savings, grants, or work. Knowing the limit early helps you build a real plan.
Grad PLUS loans are ending
There is a big change for graduate students. Grad PLUS loans are going away. Starting July 1, 2026, no new applicants can get a Grad PLUS loan. If you are heading to graduate school as a new borrower, this loan will not be there for you.
There is a legacy provision. That means students who already have Grad PLUS loans can keep borrowing under the old rules in some cases. But anyone new, after that date, cannot start a Grad PLUS loan.
If you are planning for graduate school, this matters. You will need to look at other ways to pay, such as other federal loans, school aid, assistantships, or savings. Plan early so the change does not catch you off guard.
How to borrow smart
Loans can help, but they can also weigh you down for years. The goal is to borrow as little as you can. Here are simple rules that protect your future.
- Use grants and free money first. A grant beats a loan every time. Check that you have claimed every grant you can, like the Pell Grant, before you borrow.
- Choose federal before private. Federal loans usually have steadier terms and more protections than private bank loans. Take federal loans first.
- Take subsidized before unsubsidized. Remember, subsidized loans do not grow while you are in school. They cost less in the long run.
- Borrow only what you need. Just because you are offered a loan does not mean you must take all of it. You can accept less. Every dollar you skip is a dollar you do not repay with interest.
- Understand repayment before you sign. Know what your monthly payment might look like after school. Know when payments start. A loan is a promise, so make it with open eyes.
The best way to keep loans small is to grow your free aid. Grants, work-study, and smart planning all shrink how much you must borrow. See your full set of money-saving moves on our maximize your aid page.
Bottom line. Subsidized loans are kinder than unsubsidized ones, so take them first. Parent PLUS now caps out at $20,000 per year and $65,000 over a student's lifetime for new borrowers. Grad PLUS ends for new applicants after July 1, 2026. Borrow federal before private, take only what you truly need, and know your repayment plan before you sign.
What to do after you file →Frequently asked questions
With a subsidized loan, the government pays the interest while you are in school, so it does not grow. With an unsubsidized loan, interest adds up from the day the money is sent out. Take subsidized loans first when you can.
For new first-time borrowers, Parent PLUS caps out at $20,000 per year for each student and $65,000 over that student's lifetime. Each child has their own separate limits.
Grad PLUS is ending. No new applicants can get one after July 1, 2026. A legacy provision lets existing borrowers keep borrowing under the old rules in some cases.
Take federal loans first. They usually have steadier terms and more protections than private bank loans. Only look at private loans after you have used your federal options.