Paying for college or grad school got more complicated this year. The order you use money in matters more than ever: free money first, federal loans second, private loans last.

What changed in 2026

As of July 1, 2026, Grad PLUS loans, which let graduate students borrow up to the full cost of school, are gone for new borrowers. Medical students now top out at $50,000 a year in federal loans and $200,000 total.¹

Step 1: Free money first

File the FAFSA, even if you don’t expect to qualify for much. Schools and many scholarships use it. Then ask your school’s financial aid office about grants and scholarships, and search for outside scholarships. If a scholarship site asks you to pay, skip it.

Step 2: Federal loans next

Federal rates for the 2026-27 school year are fixed and the same for everyone: 6.52% for undergraduates, 8.07% for graduate students and 9.07% for parent PLUS loans.² Your credit score doesn’t change them.

They also come with protections private loans don’t, like Public Service Loan Forgiveness for people who work for a government agency or a 501(c)(3) nonprofit.³

Step 3: Private loans for the gap

Still short? Private student loans can cover the rest. Before you apply:

• Pick a fixed rate unless you have a good reason not to.
• Don’t trust the ad rate. The lowest rates go to the strongest applicants. A cosigner with good credit can help.
• Compare at least three lenders using their rate checks.

Private student loan lenders to compare

College Ave

Private student loans for undergraduates, graduate students and parents.

Check College Ave rates (paid link)

Sallie Mae

Private student loans for undergraduate and graduate school, plus a free scholarship search.

Check Sallie Mae rates (paid link)

SoFi

Private student loans for undergraduate and graduate students, and parents.

Check SoFi rates (paid link)

Rates, terms and eligibility are set by each lender, may change at any time and are subject to credit approval. Check each lender’s site for current rates.

Sources

1. Key Changes to Federal Student Loans Made in the One Big Beautiful Bill Act, Harvard Student Financial Services.
2. Interest Rates for Direct Loans First Disbursed Between July 1, 2026 and June 30, 2027, U.S. Department of Education, Federal Student Aid.
3. Tackling the Public Service Loan Forgiveness Form, Federal Student Aid.

Advertiser disclosure: Personal Loan Time may earn a commission when you click some links on this page. That never changes what we say. We are not a lender, and this isn’t financial advice.