Editor's choice: Credible Labs Inc. (Student Loan Platform)
- Compare multiple lenders
- No hidden fees
- Get rates without affecting your credit
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.
Both federal and private student loans are available to undergraduate students. Federal student loans are typically less expensive and have more flexible repayment options than private student loans. This is why financial aid offices and even private lenders tend to encourage students to apply for federal loans first before considering private financing.
Undergraduate students have more federal loan options available to them than any other type of student. They currently include:
Private student loans are designed to cover education expenses where federal loans fall short. Most providers offer funding for undergraduates, though you’ll likely need to bring on a parent or guardian as a cosigner to meet the credit and income requirements.
They’re typically more expensive than federal loans and have less flexible repayment plans and fewer forgiveness, deferment and forbearance options. But you can generally cover all of your school-related costs, including housing and other living expenses.
Some private student lenders also offer parent loans as an alternative to the Parent PLUS Loan. These sometimes have more competitive rates, though repayment terms are often shorter and less flexible — parents generally only have 10 years to pay them back.
To get around this, parents can refinance a private parent loan for a longer term or into their child’s name.
It’s possible to get a private student loan without a cosigner as an undergraduate, though your options are limited. These loans are often designed for international students who don’t know a qualified US resident to cosign their loan. They tend to come in smaller amounts with higher rates and shorter terms.
How much you can borrow as an undergraduate depends on several factors. Federal loans come with annual limits depending on the loan type, year you are in school and whether the Department of Education (DoE) considers you a dependent or independent.
Private and parent student loans are typically based on your school’s cost of education, though some have lifetime limits.
|Type of loan||Typical annual maximum|
|Direct Subsidized||$3,500 to $5,500|
|Direct Unsubsidized||$5,500 to $12,500|
|Parent PLUS||Up to 100% of the school-certified cost of attendance.|
|Private undergraduate||Up to 100% of the school-certified cost of attendance.|
|Private parent||Up to 100% of the school-certified cost of attendance.|
It depends on the type of student loan. The easiest way to compare the cost of a loan is by looking at its annual percentage rate (APR), which includes both interest and fees. However, the Department of Education typically quotes the interest rate and fees separately.
|Type of loan||APR|
|Private undergraduate||Typically 3% to 18%|
|Private parent||Typically 6% to 13%|
Federal student loans for undergraduates come with fixed interest rates that stay the same while you’re repaying your loan. However, private lenders typically also offer variable rates, which can increase or decrease depending on the lending market.
Variable rates are a bit of a gamble — they have the potential to go lower or higher than fixed rates. They also make your monthly repayments less predictable. But if you’re lucky, you could save in interest.
Typically, full monthly repayments aren’t due until six months after you drop below half time in school, with the exception of parent loans. Private student loan providers often give you the option to make interest-only repayments or small fixed repayments of around $25 while you’re still in school.
Once full repayments start, you have a wide range of repayment plans to choose from with federal loans — including several based on your income or graduated plans that increase over time. Private loans typically only offer one standard repayment plan.
There are. In fact, student loans might not be your first choice. These options might help you pay for college at a lower cost:
Undergraduate students generally have more options when it comes to student loans than any other type of student. Federal loans are generally less expensive and should be your first choice before turning to private options.
Learn more about how it all works with our guide to student loans.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.