When Maya opened her acceptance packet, she felt equal parts excitement and worry. She knew tuition, books, and rent were due, and she needed a clear plan to cover costs.
Think of this guide as the map she wished she had. You’ll get a simple overview of what a loan covers and who offers them.
We explain how interest and rates change what you pay over time, so you can plan repayment with confidence. You’ll learn the key differences between federal and private options and when each makes sense.
This section links to official terms and a detailed look at fixed vs variable rate choices so you can compare offers before you commit: see the government guide and a comparison of fixed and variable refinancing options.
By the end, you’ll understand how borrowing up to 100% of your school-certified cost works and what lenders check, including credit and income. That way, you move from confusion to action with a clear next step for the year ahead.
For details on terms, visit the official guide to terms and conditions, and for rate-type comparisons see this fixed vs variable refinance analysis.
Your 2026 buyer’s guide to student loans
As you plan for the next academic year, knowing which expenses qualify for borrowing makes decisions easier. Below is clear, practical information to help you match costs to funding and avoid over-borrowing.
What student loans cover: tuition, housing, books, and more
Eligible expenses include tuition, mandatory fees, on-campus housing or off-campus rent, meal plans, textbooks, travel, a laptop, and required equipment. Schools certify a cost of attendance (COA) that sets the upper limit for what you can borrow in a given year.
When to consider borrowing after financial aid
Stack grants and scholarships first, then federal aid. Only look at a private loan to fill the remaining gap minus financial aid. Private lenders may approve up to 100% of your certified COA for the year, often with an online application at no cost.
- Check disbursement vs refund rules with your college so you know who gets paid and when.
- Borrow what you need to cover certified costs and keep future monthly payments affordable.
- Use calculators to turn loan amounts into projected monthly payments before signing.
| Expense | Covered? | Notes |
|---|---|---|
| Tuition & fees | Yes | Core part of COA |
| Housing & meals | Yes | On- or off-campus options certified |
| Books & equipment | Yes | Includes required tech and tools |
| Personal non-essentials | No | Avoid borrowing for extras |
For details on applying for private help, review this guide on applying for private student loans.
Federal student loans vs. private student loans: how to choose
Knowing when to use federal help and when to turn to a private lender protects your wallet. Start with grants and scholarships, then use federal loans first because they offer legal protections that private lenders can’t match.
Why exhaust federal options first
Federal loans come with income-driven repayment, deferment, and possible forgiveness. Those features can reduce monthly pain during low-income periods or hardship.
Rate differences and protections
Federal rates do not depend on credit. Private offers are credit-based and may offer fixed or variable rate choices. Private lenders often give a small autopay discount during active repayment.
When private funds fill the gap
After you subtract grants, scholarships, and federal aid from your COA, a private loan from a lender can cover the remainder.
- Compare total lifetime cost, not just the headline rate.
- Check underwriting, fees, and autopay terms before you sign.
- Use prequalification tools to see personalized rate estimates.
For a concise look at top private options, see this best private student loans guide.
Understanding interest rates in 2026
How rates move in 2026 will directly affect your monthly budget and long-term cost. This section gives clear information so you can compare offers and plan payment timing.
"Small changes in a benchmark can change what you pay every month."
Fixed vs. variable choices
Fixed interest rates stay the same for the life of the loan, which makes monthly payments predictable and budgeting easier.
Variable rates track a benchmark and may rise or fall, so monthly payments may vary over the period.
How SOFR and rounding work
Many lenders tie variable offers to the 30-day Average SOFR. Lenders often round up to the nearest one-eighth of a percent when they reset your rate.
Autopay, credit, and real cost
Autopay commonly cuts the rate by 0.25 percentage points while withdrawals succeed. Borrowers with poor credit can face up to 6% higher rates and as much as 9% higher fees.
| What to check | Why it matters | Example |
|---|---|---|
| Index + margin | Shows how variable rate is built | SOFR + 3.25% |
| Autopay discount | Reduces APR during active payments | −0.25 pp |
| Fees & terms | Affects total cost over time | Origination, late fees |
For federal context and current benchmarks, see the federal rate guide.
Eligibility, credit, and cosigners
Before you apply, know how eligibility and credit checks shape what a lender will approve. Private student financing is credit-based, so lenders review your credit history, outstanding debts, income, and debt-to-income (DTI) ratio to decide on approval and pricing.
What lenders check: credit reports, recent income documentation, current monthly debts, and enrollment at an accredited school. Typical eligibility rules include U.S. citizenship or qualifying residency, enrollment status, and minimum loan amounts.
Credit checks, income, and debt-to-income basics
Strong credit or a higher credit score usually lowers interest and fees and can increase the amount a lender will approve. A low DTI shows you have room to make future payments.
Approvals can be fast sometimes ten minutes but may take several business days if verification or extra documents are needed.
How a cosigner helps
Many undergraduates need a creditworthy cosigner; for example, last year 91% of one major lender’s undergraduate applications were cosigned. Adding a cosigner can lift approval odds and secure better pricing.
- Cosigner release is possible after a history of on-time principal and interest payments and meeting the lender’s credit criteria.
- Both borrower and cosigner share repayment responsibility, and on-time or late activity affects both credit profiles.
For practical tips on cosigning and responsibilities, read this guide on cosigning. To compare private options that include cosigner features, see this best private options.
What you can use student loan funds for
A clear inventory of certified expenses helps you request the right amount and avoid unnecessary borrowing.
What counts toward your school-certified cost of attendance: tuition and mandatory fees, on- or off-campus housing, meal plans, and approved utility allowances. These items form the baseline your college uses to certify the maximum amount you may borrow.
Other commonly approved expenses
Books, lab materials, travel to and from college, a laptop, required equipment, and supplies are typically allowed. Adding commuting or special program costs can raise the certified amount when documented properly.
- Funds usually disburse directly to your school, often once per term to match billing.
- If aid exceeds billed charges, the school issues a refund you can use for approved living or educational costs.
- Keep receipts and cost estimates so certification reflects real need and avoids over-borrowing.
| Expense | Covered? | How it’s certified | Notes |
|---|---|---|---|
| Tuition & fees | Yes | School billing records | Primary COA item |
| Housing & meals | Yes | Campus or projected off-campus rates | Can change if you move midterm |
| Books, laptop, supplies | Yes | Student-provided estimates or receipts | Document required items |
| Personal extras | No | Not included in COA | Avoid borrowing for non-educational wants |
Applying for private student loans
A smooth application begins with research: prequalify, compare, then complete the form. Start online with lender prequalification tools to view personalized rate ranges without a hard credit pull.
Compare offers side-by-side on rate type, fees, discounts, and repayment choices. Look for autopay discounts and whether the lender offers in-school payment options like interest-only or fixed $25 starts.
Completing the application and credit impact
Gather ID, income proof, school info, and housing details before you apply. Most applications are free and quick on the lender’s site.
Lenders may run a soft check for prequalification. A hard credit inquiry usually happens when you submit the final application and can temporarily affect your credit score.
School certification, timing, and grace period
After approval, the lender sends a certification request to your school. Many schools certify about 30 days before the term begins.
Disbursements typically occur per semester. If you pick in-school payments, they usually start after funds hit your account. Watch for any right-to-cancel period and set reminders for certification windows.
- Respond quickly to lender requests to avoid delays.
- Coordinate with your financial aid office to confirm certification timing.
- Lock in discounts like autopay once your repayment period begins.
| Step | Typical time | What to watch for |
|---|---|---|
| Prequalification | Minutes | Soft inquiry, estimated rates |
| Final approval | Days | Hard credit check |
| Certification → disbursement | 2–6 weeks | School processing & term start |
For a curated list of private providers with competitive rates, review this private lender comparison before you apply.
Repayment options and how they affect your budget
Your repayment choice is the tool that controls monthly strain and total cost.
Many lenders offer in-school options so you can keep payments manageable while you study. Two common choices are interest-only and a fixed $25 monthly payment.
In-school interest-only vs fixed $25
Interest-only payments stop balance growth while you attend, which limits capitalization after graduation.
A $25 fixed payment keeps a habit of on-time payments but may not cover full interest. That can increase total interest when regular payments start.
Deferred and graduated repayment
Some lenders let you defer full repayment until after school plus a typical six-month grace period. That delays monthly payments but can raise your balance through accrued interest.
Graduated repayment starts lower and rises over time. It helps early budgets but often increases total interest paid.
Principal and interest: how payments break down
Each monthly payment splits into principal and interest. Paying extra toward principal reduces future interest and shortens the period.
- Autopay often trims your rate by 0.25 percentage points during active repayment.
- Small in-school payments can prevent capitalization and save you money long term.
- If income changes, switch plans or add extra payments to accelerate payoff.
| Option | Effect on balance | When to pick |
|---|---|---|
| Interest-only in-school | Limits balance growth | You expect a moderate starting salary |
| $25 fixed in-school | Builds payment habit; may accrue interest | Low cash flow while enrolled |
| Deferred | Interest accrues; higher total cost | Need full focus on studies |
Plan your repayment around expected income and use calculators to model monthly payments and total cost. For budgeting help tied to repayment, see this guide on budgeting your way to freedom.
Cost controls: fees, terms, and calculators to plan smarter
Comparing offers by APR alone can mislead. Lenders may use different term lengths or repayment assumptions when they show APR, so a longer term can make APR look lower even though you pay more interest over the life of the loan.
APR pitfalls: why comparing different terms can mislead
APR combines rate and fees into one number, but the math depends on term and payment timing. Two offers with similar APRs can have very different monthly payment profiles and total interest across the year.
No-fee loans vs. lower-rate loans with fees
Fees like origination or disbursement add to your upfront cost and raise the effective rate. As a rule of thumb, 3%–4% in fees ≈ a 1% rate increase. That helps you quickly judge whether a slightly lower headline rate actually saves money.
Using payment and comparison calculators to estimate monthly payments
Use a payment calculator to model monthly payment and total interest for each offer. Then use a comparison tool that normalizes fees, rates, and terms so offers are apples-to-apples.
- Check monthly payment and total interest for the exact term you’d choose.
- Apply the 3% - 4% fees rule to spot hidden costs fast.
- Prefer no-fee when you plan a short payoff time; a lower rate with high fees can pay off only if you keep the loan many years.
| What to compare | Why it matters | Quick check |
|---|---|---|
| Headline rate | Shows nominal interest | Model monthly payment |
| Fees | Increase total cost | Convert to % using rule of thumb |
| Term | Controls monthly amount & total interest | Run scenarios for different years |
Checklist: collect each offer’s rate, fees, term, and projected loan payments. Run calculators for your likely payoff time, and reduce the amount you borrow where possible to cut total cost.
Lender landscape at a glance
Seeing how top providers differ makes comparing offers fast and practical. Below are compact profiles so you can spot the features that matter: maximum amount, rate types, discounts, and repayment choices.
Sallie Mae
What to know: school-certified undergraduate and graduate coverage up to 100% of certified costs. No origination or prepayment fees are common.
Offers in-school options like interest-only and a $25 fixed payment. Variable rates often track 30-day SOFR and autopay trims rate by 0.25 pp.
Credible marketplace
What to know: a kayak-style site that shows prequalified offers from multiple lenders after one soft-credit form.
This saves time in your application search and helps you compare personalized rate estimates without hurting your credit score.
Ascent
What to know: both cosigned and non-cosigned paths, terms from 5–20 years, and no fees. Autopay discounts range about 0.50%–1.00%.
They also offer a 1% cash-back graduation reward for qualifying accounts, which can lower your effective cost after you finish school.
College Ave
What to know: flexible term choices (5, 8, 10, 15 years), multiple in-school repayment options, and quick decisions with no application or origination fees.
Other lenders and state-based options
State-based lenders like MEFA, RISLA, and the Bank of North Dakota sometimes offer competitive rates and borrower perks.
Credit unions and banks Navy Federal, PNC, SoFi also participate with varied benefits like member programs or bundled products.
| Lender | Max amount | Rate types & discounts | Notable features |
|---|---|---|---|
| Sallie Mae | Up to 100% COA | Fixed & SOFR variable; autopay −0.25 pp | No origination/prepay fees; in-school options |
| Credible | Multiple lenders | Varies by partner; soft prequal | One form compares offers; no hard pull for prequal |
| Ascent | Cosigned & non-cosigned limits | Fixed/variable; autopay 0.50%–1.00% | No fees; graduation cash-back; flexible terms |
| College Ave | Varies by program | Fixed & variable; no fees | Fast decisions; multiple in-school repayment choices |
How to use this: match lender features to your profile. Your credit and graduate or undergraduate status will shape the final rate and amount you can get.
For a side-by-side private lender comparison, check this private lender comparison to narrow your shortlist before you apply.
Next steps to take control of your student loan strategy
Next steps to take control
First, map out what you must pay for next year and use savings, grants, and scholarships to cut that amount before you borrow. Prioritize federal student loans and other federal options first.
Shortlist 3–5 lenders or a marketplace to prequalify and compare personalized rates without a hard credit pull. Check rate type, term, fees, and in-school repayment choices, and remember many lenders offer a 0.25 pp autopay discount.
Time your application so your school can certify funds about 30 days before term start and track semester disbursements. Use calculators to turn amounts and rates into monthly payments, tighten borrowing to what you truly need, and set reminders for grace periods and first payments.
For practical repayment tips and next steps, see this repayment tips.
💰 FAQ (Education Loans 2026)
What do these education loans cover?
They typically pay for tuition, housing, meal plans, fees, textbooks, computers, and approved program-related costs. Schools certify cost of attendance and lenders fund only those expenses.
Why should you use federal options before private ones?
Federal loans usually offer lower rates, income-driven repayment plans, deferment options, and protections like forgiveness in limited cases—features private lenders rarely match.
How do fixed and variable interest rates affect payments?
Fixed rates remain constant and predictable. Variable rates fluctuate with indexes such as the 30-day SOFR, causing monthly payments to rise or fall over time.
What role does the 30-day SOFR index play?
SOFR determines the base of your variable APR. Lenders add a margin on top. If SOFR rises, payments increase; if it drops, your APR falls.
Can autopay lower your APR?
Yes. Many lenders offer autopay discounts that reduce APR slightly and lower total interest paid as long as auto-payments stay active.
How does your credit score influence the rate?
Higher credit scores qualify for better rates and terms. Low scores may require a cosigner or result in higher APRs.
When do lenders run credit checks?
Prequalification uses soft checks. A full application triggers a hard inquiry that may temporarily lower your score.
How can a cosigner help?
A strong cosigner improves approval odds and can secure lower interest. They share legal responsibility for repayment.
What repayment choices exist while enrolled?
Options include interest-only payments, fixed low amounts, or full deferment. Paying interest early reduces long-term cost.
What happens after graduation?
Federal loans provide a six-month grace period. Private lenders vary—some match it, others require earlier payments.
How do principal and interest payments change total cost?
Paying only interest freezes principal and increases total cost. Paying principal reduces balance faster and lowers interest paid.
What fees should you watch for?
Compare origination, late fees, prepayment penalties, and application charges. Consider total APR and long-term cost.
Why can APR comparisons be misleading?
APR assumes fixed behavior and terms. Different repayment lengths, deferments, and borrower actions make side-by-side APRs imperfect.
How do you estimate monthly payments?
Use calculators with loan amount, term, rate, and autopay discount. Compare several scenarios to forecast repayment.
Which lenders are commonly used?
Sallie Mae, Credible, Ascent, and College Ave stand out for flexible terms, cosigner options, and varied repayment menus.
When should you consider private financing?
After maxing federal aid, private loans can fill remaining gaps. Compare rates, cosigner requirements, and school disbursement.
How can you lower long-term cost?
Pay interest while studying, choose shorter terms when possible, enroll in autopay, avoid late fees, and refinance only with better rates.
Need Help Understanding Student Loans?
Compare federal and private loan options, interest rates, repayment plans, and find the best financing path for your education.