Loans can fill the gap between the amount of financial aid a student receives and the cost of college.
Understand What's New
2026-27 Federal Loan Changes
Significant changes to federal student loans take effect on July 1, 2026. Learn about key updates to see how they may affect how you borrow, repay, or plan your educational costs.
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.
I am a current undergrad that borrows federal student loans. Has anything changed for me?
Yes. Institutions are required to prorate annual loan amounts in direct proportion to the percent of full-time status. This means that loan amounts are calculated based on the amount of credit hours that a student is enrolled in.
I am a new incoming freshman. Will I be offered federal student loans?
Yes. Students that file a FAFSA are eligible to receive federal student loans. To file a FAFSA, visit https://studentaid.gov/.
How much can I borrow?
There are maximum amounts for annual borrowing, based on your class and dependency status:
Click on the Financial Aid tab and “Financial Aid Dashboard”
Select “Offer” to review or accept
Please note that this financial aid offer is based on your eligibility at the time of disbursement and may change at the end of the Drop/Add period.
I accepted my federal student loan. Why haven’t I received it yet?
For loans to disburse, a student must complete Entrance Counseling and create a Master Promissory Note (MPN). To complete these steps, please log in to the following sites using your FSA ID:
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.
Questions?
I’m a current Graduate PLUS Loan borrower. What changed?
The graduate PLUS Loan Program will no longer be available for new borrowers beginning Jul 1, 2026.
Legacy Provision:
Current borrowers who originated a Federal Direct Loan before Jun 30, 2026, may qualify to continue borrowing a Grad PLUS Loan.
The student can continue to borrow for 3 academic years or until the end of the student’s published program length of study, whichever is less.
The student must stay enrolled in the same program of study at the same institution.
I’m a new graduate student. What am I eligible for?
Starting with new loans after July 1, 2026, graduate and professional students can borrow unsubsidized federal loans:
Graduate Loan Eligibility
Student Type
Yearly Limit
Total (Lifetime) Limit
Graduate students (master’s, most PhD programs)
$20,500 per year
$100,000 total
Professional students (law, medicine, pharmacy, etc.)
$50,000 per year
$200,000 total
Important: Undergraduate loans do NOT count toward these graduate/professional totals.
For students who attend both graduate and professional school, the combined lifetime limit is $200,000 total.
What is a “professional student”?
A professional student is someone enrolled in a program that prepares you to legally practice a specific profession and usually requires a license.
Examples include programs like:
Law (JD)
Medicine (MD, DO)
Dentistry
Pharmacy
Veterinary Medicine
Optometry
Podiatry
Chiropractic
Clinical Psychology (PsyD)
Divinity/Theology (M.Div.)
These programs are usually doctoral-level and take about 6+ years of college education to complete. Most master’s degrees and many PhD programs are considered graduate programs, not professional programs.
Does my program qualify as a “Professional Program?”
The Clinical Psychology: Doctor of Psychology (PsyD) is the only “professional program” at ASU according to the new federal definition.
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.
Questions?
What are Parent PLUS Annual & Aggregate Loan Limits?
All parents (combined) may borrow $20,000 per year per dependent student, with a $65,000 aggregate (lifetime) limit per dependent student (without regard to amounts forgiven, repaid, canceled, or discharged).
What is the Legacy Provision for current parent PLUS Loan borrowers?
You will be considered a Legacy borrower and may still borrow a PLUS Loan for your student without being subject to the new regulation if:
The student or parent borrower has a Federal Direct Loan made before July 1, 2026, and
The student stays consecutively enrolled in the same program at the same institution.
The Legacy provision is only permitted for three academic years (through the 2028-29 academic year) or until the end of the student’s published program length of study, whichever comes first.
Borrowers with loans prior to July 1, 2026, can keep existing repayment options.
I have a current student at App and a new freshman incoming. Can I borrow a parent PLUS loan for both?
Yes, It is possible for a parent to have a legacy student and non- legacy student at the same time. See criteria above for the continuing student.
If the parent borrows for the new incoming student, the new rules apply:
Parent PLUS loan amounts are capped at $20,000 per year, per student, with a total lifetime limit of $65,000 per student.
New loans will be placed in a new "Standard" repayment plan (10 to 25 years based on balance) and will not be eligible for Income Driven Repayment (IDR) plan options.
If my student takes a semester or year off, will they be eligible for the parent PLUS loan when they return?
Only under the new rules (if the parent still has eligibility). If your student takes a semester or a year off, they are not consecutively enrolled and are not considered Legacy borrowers.
My student is not graduating in 4 years and needs more time. Am I eligible for a PLUS loan?
Maybe. If the undergraduate student has not earned the degree within the 4 year timeframe, they are no longer considered “legacy” and are not eligible for the PLUS loan, unless the parent borrower has not borrowed up to the lifetime limit of $65,000. The parent may borrow up to that cap, with new repayment rules in place.
My student is no longer eligible for the PLUS loan. What are my options?
Please contact our office directly for more information regarding options for your student, which may include researching:
Private loans, private student loans, military education benefits,scholarship opportunities, etc.
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 the 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.
