Loans can fill the gap between the amount of financial aid a student receives and the cost of college.
Student loans can help finance your education but must be repaid, often with interest. If you apply for financial aid, your offer may include loan options.
Before applying for a loan, consider the following:
Types of Loans
Application Process
Loan Limits
Cost of Borrowing
Repayment
Loan Forgiveness
It is important to know there are loans available for higher education for both students and parents: Once App State receives your FAFSA, we provide an aid offer that will include any federal student loan eligibility you may have.
Student Loans
Federal Direct Student Loans
Are in the student’s name and are the responsibility of the student to repay.
Subsidized Direct Student Loans available only to undergraduate borrowers, do not accrue interest while enrolled at least half time.
Do not require a credit history or a credit check.
Require a proportional reduction for less-than-full time enrollment beginning July 1, 2026 (undergrad enrolled in 6 credits has 50% loan eligibility, e.g.).
Have a six-month grace period after you’ve graduated or dropped below half time when you do not have to begin paying back the loan.
Currently enrolled graduate students who have previously borrowed a Federal Loan while enrolled in their current graduate program will be eligible to continue borrowing the Grad PLUS Loan for up to three additional years or until they reach the published length of their program, whichever comes first.
Students who change programs and borrow after July 1, 2026 will be considered new borrowers and will no longer be eligible for a Grad PLUS loan.
Beginning in July of 2026, graduate students enrolled on a less than full-time basis will no longer be eligible for the full amount of the Grad PLUS loan. Loan amounts will vary based upon enrolled hours.
Private Student Loans
Are in the student’s name and are the responsibility of the student to repay.
Require a limited credit check. Eligibility is based on the absence of adverse credit history.
Are eligible for deferment of repayment until after student graduates or drops below half time.
Are limited to $20,000 per student per year with lifetime maximum borrowing of $65,000 for first-time borrowers after July 1, 2026.
Are only eligible for standard repayment options if a PLUS loan is borrowed after July 1, 2026.
Private Parent Loans
The loan is in the parent’s name and is the responsibility of the parent to repay.
The borrower chooses the lender.
Accrues interest after disbursement.
Interest rates can be variable or fixed and are dependent on credit rating.
Require a credit history or a credit check.
Can have a third-party co-signer to help with approval or interest rate.
Application Process
Navigating the loan application process does not have to be difficult. We've got you covered. Learn how students and parents can apply for federal and private loans and understand key requirements.
Federal Direct Student Loans
Complete the FAFSA using App State’s school code 002906.
Complete the required online Entrance Counseling to ensure you understand your loan responsibilities.
If you are an undergraduate or a parent with limited credit, decide if you would benefit from a co-signer for lower rates.
Choose your lender and submit your application directly to the lender.
Once approved, the lender will send a certification request to App State and it will be added to your financial aid.
If you are graduating, withdrawing or dropping below half time, you must complete exit counseling within 30 days to review repayment obligations.
Each loan type has specific requirements. Please note that Entrance and Exit Counseling are only required for Federal Loans. This includes Federal Subsidized, Unsubsidized, and Grad PLUS loans. If you are borrowing through a private lender, follow the specific instructions provided by your bank or credit union.
Loan Limits
There are limits to how much you can borrow with federal and private loans. Learn what those limits are and how they may affect your financial aid options.
The following chart shows the annual and aggregate limits for subsidized and unsubsidized loans.
Year
Dependent Students
Independent Students
Parent of Undergraduate Student
Graduate Students
1st year
$5500 with no more than $3500 in subsidized loans
$9500 with no more than $3500 of this as subsidized
as of July 1, 2026 $20,000 PLUS loan maximum per student
$20,500 unsubsidized, Grad PLUS no longer available to new borrowers after 7/1/26
2nd year
$6500 with no more than $4500 in subsidized loans
$10,500 with no more than $4500 of this as subsidized
as of July 1, 2026 $20,000 PLUS loan maximum per student
$20,500 unsubsidized, Grad PLUS no longer available to new borrowers after 7/1/26
3rd year and beyond
$7500 with no more than $5500 in subsidized loans
$12,500 with no more than $5500 of this as subsidized
as of July 1, 2026 $20,000 PLUS loan maximum per student
$20,500 unsubsidized, Grad PLUS no longer available to new borrowers after 7/1/26
Lifetime limit
$31,000 with no more than $23,000 in subsidized loans
$57,500 with no more than $23,000 of this as subsidized
as of July 1, 2026 lifetime borrowing maximum $57,000 per student.
$100,000 lifetime borrowing maximum for Master's and PhD students
Private Loan Limits
Private loan borrowing is limited to the school’s Cost of Attendance (COA) less any other financial aid received by the student. Aggregate limits, or the total amount you can borrow over the course of your education, is dependent on the borrower's debt levels and income.
Cost of Borrowing
There are several factors that contribute to the overall cost of borrowing educational loans:
Origination Fee
Interest Rate
Interest Accrual
An origination fee is a charge that some lenders apply to help cover the cost of processing a loan. This fee is deducted from the loan amount before the funds are disbursed. Federal government loans include an origination fee for both student and parent borrowers. In contrast, state government and private loans are less likely to charge this fee.
The interest rate is the cost of borrowing money, typically expressed as an Annual Percentage Rate (APR). Interest rates for federal loans are fixed, meaning they remain the same for the life of the loan. Other loans can have variable interest rates, meaning they can fluctuate over time based on changes in a financial index.
Interest accrual refers to when interest begins to accumulate on your loan. For unsubsidized loans, interest starts accruing from the date the loan is disbursed. For subsidized loans, interest does not begin to accrue until the loan enters repayment—usually six months after you leave school or drop below half time.
Repayment
The start date for paying back your educational loan depends on the type of loan you borrow.
Federal Student loans go into repayment six months after the student drops below half-time enrollment. There is a six-month grace period between enrollment and repayment during which time payments are not required. For subsidized loans, interest does not accrue during the grace period.
Federal Parent loans allow borrowers to choose when to repay. It can begin once the loan is disbursed or 6 months after the student drops below half time. Parents can also choose to make interest-only payments to keep the interest from accumulating over time.
Any student or parent who borrows a federal educational loan after July 1, 2026 has two repayment plan options:
Tiered Standard Plan—All undergraduate, graduate, and parent borrowers are eligible for the Tiered Standard Plan which has a repayment term of 10-25 years, depending on the amount borrowed.
Tiered Standard Repayment Plan Terms
Outstanding Principle
Repayment Term
Less than $25,000
10 years
$25,000-$49,999
15 years
$50,000-$99,999
20 years
$100,000 or more
25 years
Repayment Assistance Plan—All undergraduate and graduate borrowers are eligible to enroll in this plan which calculates payments based on annual income (AGI) and number in the household. Parents who borrow PLUS loans after July 1, 2026 are not eligible to enroll in this plan.
All eligible Direct Loans must be paid under the same plan. Borrowers are encouraged to calculate their monthly payments and explore eligible options by using the Studentaid.gov Repayment Calculator.
Please note: Any parent or student who borrowed before July 1, 2026 and did not borrow additional loans after July 1, 2026 has additional repayment plan options to choose from. If the borrower is enrolled in a plan that is scheduled to be discontinued, they will have the opportunity to select a new plan. If a selection is not made before a plan is discontinued, student borrowers will be enrolled in either the Tiered Standard or Repayment Assistance Plan; parent borrowers will be enrolled in the Tiered Standard Plan.
Loan Forgiveness
If you work in a qualifying government or not-for-profit organization, you may be eligible for loan forgiveness. Public Service Loan Forgiveness (PSLF) is the most common way borrowers can apply to have their loans forgiven after having made 120 qualifying monthly payments. All eligible borrowers must be enrolled in one of the income driven repayment plans to qualify for PSLF.
