Student Loans for Freshmen

If you are starting college for the first time or are the parent of a new college student, you likely need to know about student loans for freshmen. Choosing where to apply for loans and whether to get federal or private student loans in your first year of college can be overwhelming.

In this article, you’ll learn the differences between federal and private student loans and which option is best for freshmen. If you need additional funding or don’t qualify for federal student loans, we’ll also provide recommendations for private student loan lenders.

Student loans for freshmen: an overview of your options

As a freshman in college, you have several student loan options. First and foremost, you can apply for federal student loans through the Department of Education. 

Federal student loans offer fixed interest rates and flexible repayment schedules. Due to these benefits, federal financial aid and student loans should always be your first stop when financing your education. 

Once you have exhausted your federal options, you can apply for private student loans if you still need funds to cover school. Below is a chart of your loan options, including our top picks for private student loan lenders.

Lender	Best for	LendEDU rating
Dept. of Education	Federal student loans	Unrated
College Ave	Private student loans	4.8/5
Sallie Mae	Cosigners	4.7/5
Credible	Student loan marketplace	4.7/5
Earnest	No fees	4.7/5
Ascent	Eligibility	4.7/5

Federal student loans for freshmen

If you need to borrow money for school, apply for federal student loans before applying for private student loans. Federal student loans have fixed interest rates and more flexible repayment options, making them a better choice for college freshmen.

Here are some options for federal student loans.

Loan type	APR	Loan amounts
Direct Subsidized Loan	5.50%	Up to $23,000 total
Direct Unsubsidized Loan	5.50% for undergraduates	Up to $20,500 annually, depending on your year in school and dependency status.
Parent PLUS Loan	8.05%	Parents can borrow the school’s certified cost of attendance (COA) minus other financial aid.

Subsidized federal loans

Getting Direct Subsidized Loans as a freshman has many benefits. The main benefit is the U.S. Department of Education pays the interest on your loans while you’re in school and during a six month grace period after you leave school.

Another benefit is Direct Subsidized Loans have a fixed 5.5% interest rate, and you can borrow up to $23,000 during your education. Subsidized federal loans are for students who demonstrate financial need.

Unsubsidized federal loans

With unsubsidized federal loans, you do not have to demonstrate financial need to get the loan. However, you are responsible for paying the interest on your loan. 

While you’re in school, the interest will accrue, unlike Subsidized Loans where the government pays for your interest while you’re in school. Direct Unsubsidized Loans have a fixed 5.50% interest rate for undergraduates.

Parent PLUS loans

A Parent PLUS loan, sometimes referred to as a Direct PLUS Loan, is a federal loan parents can take out to help pay for their freshman’s college tuition. 

The government does conduct a credit check (on the parent if a minor/undergraduate) to see if you qualify for these loans. However, even if you have adverse credit, you might be able to get the loans if you get an endorser or document your extenuating circumstances.

Parent PLUS loans have a fixed interest rate of 8.05%. You can borrow the cost of your child’s tuition and living expenses minus any financial aid they’ve already received. 

Expert’s take on taking on debt for the first time

Erin Kinkade

CFP®

Hopefully, this is not the first time a freshman thinks about managing finances, but if it is, I recommend you speak with your parents or guardians about strategies to create a budget and guidance on taking on debt. The key advice I would give immediately is to create a budget to manage your finances in a responsible manner to begin building/establishing a favorable credit profile.

How to get federal student loans as a freshman

Recent data from Enterval Analytics, LLC reports that of the $1.73 trillion in outstanding student loans, 92.48% ($1,602.20 billion) are U.S. Department of Education federal loans. Getting federal student loans is straightforward for students, which is one reason federal loans account for such a large percentage of the total student loan debt.

Here is a short explanation of how to get federal student loans as a freshman.

1. Fill out the FAFSA.
2. Get your Student Aid Index, which evaluates the resources available to you to pay for college.
3. Learn about your federal student loan options at the schools that accept you.
4. Choose the educational institution you want to attend.
5. Complete entrance counseling. (This is required if you’ve never had a federal student loan before.)
6. Sign your Master Promissory Note (MPN), a legal document that says you agree to repay your loans plus interest.
7. Enroll in school.
8. Receive any excess funds after the government disburses your loans directly to your school.

If you don’t know where you want to go to school yet, send your FAFSA to the schools you’re interested in attending. The FAFSA allows you to list up to 10 schools. Then, you can wait to see which schools accept you and what financial aid packages they offer.

Remember that you can start filling out the FAFSA as early as October 1 but no later than June 30. Check with each school you’re applying to to see what their deadlines are for financial aid and scholarship decisions. Generally, the earlier you apply to schools, the better.

The best private student loans for a freshman

If you still need to borrow additional funds for college after applying for federal student loans, private student loans can help you bridge the gap. 

Many private lenders require students to apply with a cosigner; however, some private lenders offer non-cosigned loans to independent students. Generally, you or your cosigner will need a good credit score to apply. Your cosigner will also have to show proof of income.

If you want to apply for private student loans, here are five lenders we recommend.

Lender	APR	Loan amounts
College Ave	4.39% – 16.85%	$1,000 – 100% of certified costs
Sallie Mae	4.50% – 16.70%	$1,000 – 100% of certified costs
Credible	4.07% – 16.85%	$1,000 – 100% of certified costs
Earnest	4.11% – 16.20%	$1,000 – 100% of certified costs
Ascent	4.29% – 15.85% (cosigned)	$2,001 – $200,000

College Ave: Best overall private student loans

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LendEDU rating: 4.8 out of 5

• Competitive fixed and variable rate loans
• Flexible repayment options
• Unsecured loans, which don’t require collateral

College Ave stands out with its competitive loan options. It provides a high level of flexibility, allowing freshmen to tailor their repayments based on individual circumstances. With no requirement for collateral, College Ave’s unsecured loans offer a somewhat less risky option for students.

Sallie Mae: Best for cosigners

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LendEDU rating: 4.7 out of 5

• Loans available for full-time, part-time, and less than half-time students
• Cosigner release option available after specific conditions are met
• No origination fee or prepayment penalty

Sallie Mae is a reliable choice for those requiring a cosigner. Its accommodating terms extend to students with different enrollment statuses. Most notably, Sallie Mae offers the option to release your cosigner under certain conditions, providing some relief for that party.

Credible: Best marketplace

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LendEDU rating: 4.7 out of 5

• Comparison platform with multiple lenders
• Free to use with no hidden fees
• Fast, straightforward process with prequalified rates in minutes

Credible holds court as an excellent platform for comparing student loans. Its user-friendly system rapidly delivers prequalified rates from multiple lenders, making your decision-making process quicker and easier.

Earnest: Best for no fees

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LendEDU rating: 4.7 out of 5

• No origination, late, or overdraft fees
• Option to skip one payment every 12 months
• Flexible repayment terms

Earnest leads the pack when it comes to avoiding the usual array of fees associated with student loans. It offers a range of flexible options and even provides the option to skip a payment, which can be helpful for students in a tight financial crunch.

Ascent: Best for eligibility

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LendEDU rating: 4.7 out of 5

• Non-cosigned options for independent students
• 1% cash back graduation reward
• Option to start repayments 60 days post-graduation

Ascent shines when it comes to eligibility for student loans. It offers both cosigned and non-cosigned options, best suited for independent students. A remarkable highlight is its 1% cash back graduation reward—a fine celebration of your achievement.

How to apply for private student loans for freshmen

According to data from Enterval Analytics, LLC, only 7.52% ($130.28 billion) of the outstanding student loans in the U.S. are private loans. It’s a good idea to max out your federal loan options first before applying for private student loans.

If you need to apply for private student loans, research multiple lenders. Private student loan lenders have varying eligibility requirements, so it’s important to choose one with requirements that match your personal situation. 

You’ll need to provide your personal and school information when applying for private student loans. If you’re using a cosigner, you’ll also have to provide their personal information, income information, and any other documents the lender requires.

The only deadline you need to consider with a private student loan is when you need your school funds. Some private lenders disperse funds in days, while others might take weeks. If you need the loans distributed before starting school, make sure to apply a few months before school starts.

Can parents of freshmen get student loans?

Yes, parents of freshmen can get student loans to help pay for their children’s college education. They can apply for federal loans with the Parent PLUS Loan option or private student loans.

With private student loans, parents can get student loans on their child’s behalf or be a cosigner on a loan with their child. With federal Parent PLUS loans, the loan will be in the parent’s name only.

Here are some benefits to consider for each option.

Benefits of federal student loans for parents

• Fixed interest rates of 8.05%
• Flexible repayment plans
• You can borrow the total cost of your child’s education minus other aid they receive
• If you have bad credit, you can still potentially get approved with an endorser or a note of explanation

Benefits of private student loans for parents

• Fixed and variable interest rates
• With excellent credit, your interest rate could be lower than federal loans
• Many private lenders allow cosigners to be released after a period of time
• Many private lenders offer loans without fees. Parent PLUS loans have a 4.228% loan fee

Ultimately, if parents want to take out a loan to help their children pay for college, they should research both federal and private loan options. While taking out a Parent PLUS loan is a common choice, some private lenders might offer better rates, better terms, and the ability to be released as a cosigner in the future.

Expert’s take on student vs. parent loan repayment

Erin Kinkade

CFP®

It depends on the circumstance, but I generally recommend parents help their child with funding college (or vocational courses) expenses within a given time period. Then, the child should begin to be solely responsible for paying for their loan (typically after graduation and/or when they begin working).

Recap of student loans for freshmen

Lender	Best for	LendEDU rating
Dept. of Education	Federal student loans	Unrated
College Ave	Private student loans	4.8/5
Sallie Mae	Cosigners	4.7/5
Credible	Student loan marketplace	4.7/5
Earnest	No fees	4.7/5
Ascent	Eligibility	4.7/5

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