Paying for college has become increasingly complex for many families. Tuition continues to rise at most colleges, and even with scholarships, grants, income, and savings, many students and parents still face a gap between available resources and the full cost of attendance.
That’s why understanding how to choose a student loan is an important step in planning for higher education. Educators and their families have several borrowing options, including federal and private loans to help cover funding needs. Comparing your options can help you make more informed decisions.
How to Pick the Right Student Loan for Your Needs
Choosing the right loan often depends on who is borrowing and your borrower status. Under the new 2026 federal guidelines, your options differ significantly if you are a “New Borrower” (starting after July 1, 2026) versus a “Legacy Borrower” (those with existing loans in their same academic program). Most borrowers fall into one of three categories:
- Undergraduates searching for the best college loans for students.
- Graduate students pursuing advanced degrees.
- Parents exploring student loan options for parents.
Before borrowing, it can help to follow a general funding approach. Many families start with scholarships, work study, and grants, such as Federal Pell Grants, which don’t need to be repaid. If additional funding is needed, the next step is typically federal student loans, including Federal Direct Subsidized and Direct Unsubsidized Loans. Federal PLUS loans may also be an option for parents or graduate students.
If those resources don’t fully cover the cost of attendance, private loans can help bridge the remaining gap. While there are many options available, private loans typically do not offer the same protections or forgiveness opportunities as federal loans, so they should be used carefully.
Federal Student Loan Options Explained
Important: This information is as of April 13, 2026
When deciding how to borrow for college, many families look to federal student loans. These loans offer fixed interest rates, borrower protections, and flexible repayment options. To qualify, students must complete the Free Application for Federal Student Aid (FAFSA).
Below are the three main types of federal student loans and how they work:
*Important note: A new universal lifetime limit of $257,500 now applies to the sum of all undergraduate and graduate federal loans (excluding Parent PLUS).
1. Direct Subsidized Loans
Direct Subsidized Loans are available to undergraduate students with financial need. One major benefit is that the federal government pays the interest while the student is enrolled at least half time, during the grace period and during certain deferment periods.
Annual borrowing limits for dependent undergraduate students are:
- First year: $5,500 total, with no more than $3,500 subsidized.
- Second year: $6,500 total, with no more than $4,500 subsidized.
- Third year and beyond: $7,500 total, with no more than $5,500 subsidized.
Because of the interest subsidy, these are often considered one of the best college loans for students.
2. Direct Unsubsidized Loans
Direct Unsubsidized Loans are available to undergraduate, graduate, and professional students regardless of financial need. Unlike subsidized loans, interest begins accruing as soon as the loan is disbursed.
The aggregate (lifetime) limits for the Direct Subsidized and Direct Unsubsidized Loans is $57,500 for undergraduates. No more than $23,000 of this amount may be in subsidized loans.
Starting July 1, 2026, the aggregate (lifetime) limits for these loans have been restructured. However, if you have a loan disbursed before July 1, 2026, you may be eligible to continue under the old, higher aggregate limits ($138,500 for grad) for up to three years.
- Graduate Students: Can borrow up to $20,500 annually, with a new standalone aggregate limit of $100,000 (this no longer includes your undergraduate debt).
- Professional Students (M.D., J.D., etc.): Can borrow up to $50,000 annually, with an aggregate limit of $200,000, not including undergraduate debt.
3. Direct PLUS Loans
Direct PLUS Loans are available to parents of dependent undergraduate students (Parent PLUS Loans) and to graduate and professional students (Grad PLUS Loans).
Parent PLUS Loans:
- Annual Cap: $20,000 per child.
- Lifetime Cap: $65,000 per child.
*Pro tip: If your child’s tuition exceeds these new caps, you may need to bridge the gap with private student loans.
Grad PLUS Loans (Phase-Out):
- New Borrowers: As of July 1, 2026, Grad PLUS loans are eliminated for new students.
- Legacy Borrowers: If you have an existing Federal Loan and stay in the same program, you can continue to borrow under the old rules through June 30, 2029.
Under the One Big Beautiful Bill Act, Parent PLUS loans that are not consolidated into a Direct Consolidation Loan by July 1, 2026, will permanently lose access to income-driven repayment plans. This means borrowers would no longer qualify for options like IBR or ICR, or for forgiveness through those plans.
It’s important to note that PLUS Loans require a basic credit check, and applicants may be denied if they have certain adverse credit histories. In some cases, borrowers may still qualify by applying with an endorser, which is similar to a cosigner.
Federal Repayment and Forgiveness Options
Federal student loans also offer repayment flexibility that can help borrowers manage debt after graduation. Most loans include a six-month grace period after graduating, leaving school or dropping below half-time enrollment before payments begin.As of July 1, 2026, borrowers will have the following standard repayment plan based on the loan amount:
- Up to $24,999: 10-year term.
- $25,000–$49,999: 15-year term.
- $50,000–$99,999: 20-year term.
- $100,000 or more: 25-year term.
Some borrowers might also qualify for income-driven repayment plans, which base monthly payments on income and number of dependents. Eligibility depends on the loan type and program requirements.
*Pro tip: Educators working in public service may be eligible for the Public Service Loan Forgiveness (PSLF) program after making 120 qualifying monthly payments while working full-time for a qualifying employer.
When Private Student Loans Can Help Fill the Gap
Federal loans, work study, scholarships and grants may not always cover the full cost of education. Private loans — such as the NEA Undergraduate Loan Program, NEA Graduate Loan Program and NEA Parent Loan Program — may help cover remaining expenses.
Here’s a breakdown of each:
1. NEA Undergraduate Loan Program
For undergraduate students who still need funding after federal aid and scholarships, the NEA Undergraduate Loan Program offers a flexible private loan option.
Key features include:
- Borrow up to 100% of the school-certified cost of attendance.1
- Loan terms of 5, 8, 10 or 15 years.
- Four repayment options, including full payments, interest-only, flat payments or deferred payments.
- No origination or application fees.
NEA members may also receive a 0.25% interest rate reduction, plus an additional 0.25% rate reduction for enrolling in automatic payments.
Students can apply with a cosigner, which could improve approval chances and potentially result in a better interest rate.
Loan payments typically begin six months after graduation or when enrollment drops below half-time.
2. NEA Graduate Loan Program
Graduate school often comes with additional expenses that federal aid may not fully cover. The NEA Graduate Loan Program helps educators and future educators finance postgraduate education.
Borrowers can:
- Cover up to 100% of the school-certified cost of attendance.1
- Choose repayment terms of 5, 8, 10 or 15 years.
- Select from four repayment options.
- Benefit from no origination or application fees.
Loan payments typically begin nine months after graduation or when enrollment drops below half-time.
3. NEA Parent Loan Program
Parents who want to help pay for their child’s education may consider a parent loan for college students. The NEA Parent Loan Program allows parents to borrow using their own credit instead of cosigning a student loan.
Key benefits include:
- Borrow up to 100% of the school-certified cost of attendance.1
- Loan terms from 5 to 15 years.
- Option to pay as little as the interest while the student is in school.
- No origination or application fees.
For families exploring student loan options for parents, this type of loan provides flexibility while allowing parents to manage repayment directly.
Factors to Consider Before Borrowing
Student loans can help achieve educational goals, but they should be approached thoughtfully. Before borrowing, consider:
- Projected earnings after graduation: Some experts suggest borrowing no more than your expected first-year salary.
- Existing resources: Scholarships, savings and current income can reduce borrowing needs.
- Personal borrowing limits: Setting a borrowing cap can help keep repayment manageable.
- Changing financial circumstances: Income or employment changes after graduation could affect repayment, so it may help to understand options like income-driven repayment or temporary payment relief.
No matter which financing path you choose, it’s important to borrow responsibly. Consider how much you’ll need to repay after graduation and how that aligns with your expected future income, because taking on more debt isn’t always the best choice.
Making Informed Student Loan Decisions
Picking the right college loan often starts with understanding all available options. Reviewing federal aid first and then comparing private loan programs can help families make informed borrowing decisions. By carefully evaluating costs, repayment options and long-term financial goals, educators and their families can approach college financing with greater confidence.
For borrowers with existing private student loans, refinancing may also be an option to explore. The NEA Student Loan Refinance Program may help eligible borrowers potentially lower their interest rate or monthly payment on existing private student loans. NEA members may also qualify for a special one-time statement credit equal to 0.5% of the refinanced loan amount, up to $599.99. Learn more about the NEA Student Loan Refinance Program here.
*Note: This information is as of April 30, 2026.
1 As certified by your school and less any other financial aid you might receive. Minimum $1,000.
