Federal Student Loans 2025 and 2026: Eligibility and How to Apply

Federal student loans are one of the most common ways to finance college — and often the most affordable. This guide breaks down the different types of federal loans, how to qualify, and what to consider before borrowing.

Federal student loans for college are loans facilitated by the US Federal Government. Most financial aid experts recommend that a federal student loan should be the first type of loan a college student applies for. Prior to July 1st of 2010, banks and financial institutions could provide federal student loans that were guaranteed against default by the US Department of Education through the federally-guaranteed student loan program.

After July 1st of 2010 all federal student loans are provided through the Direct Loan Program, where the funding comes directly from the federal government. Applying for federal student loans is done by filing a FAFSA (Free Application for Federal Student Aid). Filing a FAFSA is free and only needs to be done once per academic year. Once you have filed your FAFSA, you will receive a SAR (Student Aid Report) which will outline the federal student loans you qualified for and at what amounts. There are three main types of federal student loans.

Federal Student Loan Comparison

How to Apply for Federal Student Loans

Applying for federal student loans is a straightforward process, but it’s important to understand each step to make the most of your financial aid package. Here’s how it works:

Step 1: Complete the FAFSA at studentaid.gov

The Free Application for Federal Student Aid (FAFSA) is your gateway to all federal student loans — and most grants and work-study programs too. Submit your FAFSA as early as possible after it opens (typically October 1 each year). You’ll need basic info about your income, assets, and school plans. If you’re a dependent student, your parents will also need to provide their financial details.

Step 2: Review Your Student Aid Report (SAR)

After submitting your FAFSA, you’ll receive a Student Aid Report (SAR) that summarizes the information you provided and includes your Expected Family Contribution (EFC) or Student Aid Index (SAI). Review this carefully for accuracy. Schools will use this data to determine your financial aid eligibility.

Step 3: Accept Federal Loans in Your Financial Aid Offer

Once you’re accepted into a college, they’ll send you a financial aid award letter outlining the types and amounts of aid you’re eligible for. This will include grants (free money), work-study opportunities, and federal student loans. You can choose to accept all or part of the loan amounts offered. Be sure to only borrow what you need — you can decline or reduce loan amounts if you prefer.

Step 4: Complete Entrance Counseling and Sign the Master Promissory Note (MPN)

Before receiving your first loan disbursement, you’ll need to complete entrance counseling — an online session that explains your rights and responsibilities as a borrower. You’ll also need to sign a Master Promissory Note (MPN), which is your agreement to repay the loan. Both are completed at studentaid.gov and only take about 20–30 minutes.

Once these steps are complete, your loan funds will be sent directly to your school to cover tuition, fees, and other costs. Any leftover funds are typically refunded to you for other education-related expenses like books, supplies, or housing.

Federal Stafford Loans

Federal Stafford loans are fixed-rate, low interest loans which are made available to undergraduate college students who are attending accredited colleges, universities, or schools, and are at least part time students. The most commonly applied for and obtained Federal student loans, are the Federal Stafford loans.

The Difference Between Unsubsidized And Subsidized Federal Stafford Student Loan
The main difference between a subsidized Federal Stafford Loan and an unsubsidized Federal Stafford Loan is who pays the interest that accrues while the student is attending college. With unsubsidized Federal Stafford Student loans you (the borrower) are responsible for all of the interest that accrues on your unsubsidized Stafford loan while you are in school, however the loan payments can still be deferred while you are attending college. When you graduate college all of the deferred interest that has been accruing while you were attending school will then be added to the principle of the loan. In the case of subsidized Federal Stafford Student Loans, the federal government will pay the interest on subsidized Stafford loans while you attend college, and during the deferment period(s).

Federal Perkins Loans

Federal Perkins Loans are low interest, subsidized (no interest will accrue on the student loan until the borrower enters repayment) loans for students who display extreme financial need. If you are a college student who has qualified for a Pell Grant, you may also qualify for a Federal Perkins Loan. Federal Perkins Student Loans are awarded as part of a package of federal, state, and other financial aid offered to students who apply for financial assistance to attend college. Federal Perkins Student Loans are dispersed to students based on the students need and the availability of student loan funds. When students apply for financial aid assistance at a particular school or college, the school or college determines which students are in the greatest need of financial assistance, then using some of their own funds along with funds provided by the state and government, offer those students Federal Perkins Student Loans.

Federal Parent PLUS Loans

Federal Parent PLUS Loans are federally sponsored, low interest student loan for parents of undergraduate, dependent college students. Parents with good credit histories can use Federal Parent PLUS Student Loans to borrow money for the whole cost of their child’s or children’s undergraduate college education (yearly limit on Federal Parent PLUS Student Loans is generally equal to the cost of attendance minus any other financial aid the child receives). Federal Parent PLUS Student Loans can be a great option for parents of college students because they allow you to borrow for your child’s college tuition, as well as room and board, supplies, travel, etc (minus any other financial aid). Qualification of Federal Parent PLUS Student Loans is a bit different then other Federal Student Loans, because the student loans are not based on financial need, but rather on the borrowers credit. The following are general qualifications for Federal Parent PLUS Student Loans: Be a U.S. citizen or eligible non-citizen, The college student(s) must be a dependent, A credit check, stipulating the parents credit and credit history is in good standing. In addition, some schools may require a completed FAFSA Application to qualify for Federal Parent PLUS Student Loans.

What Makes Federal Student Loans Different From Private Student Loans

The largest differences between federal student loans and private student loans, are that federal student loans have lower interest rates, do not require credit checks, and often times provide a wider variety of deferment options and extended repayment terms. It is because of the differences listed above that college students are advised to exhaust their federal student loan options (and other free money for college options such as scholarships and grants) first, and then supplement what the federal student loans will not cover with private student loans.

Many college students find that federal student loans do not cover the full costs of their college expenses. When considering a private student loan it is important to do your research. Compare different private student loans from different lenders to make certain you are getting the best deal and carefully read and understand your rates, terms and repayment options. Private student loans can help bridge the gap from what you receive in federal financial aid and what your full college expenses are, but be careful to not borrow more than you absolutely need.