Supplemental Student Loans

While federal direct student loan qualifications are set by the Department of Education, the school you attend determines how much you can borrow. That amount may not fully fund your education, depending on your degree and other aid you qualify for. In these cases, supplemental student loans can help bridge the gap.

We’ll explain how supplemental student loans work, how they differ from federal student loans, and how to find the right ones for you.

Lender	Best for	LendEDU rating
Dept. of Education	Federal student loans	Not rated
College Ave	Best overall	5/5
Sallie Mae	Cosigners	4.8/5
Earnest	No fees	4.7/5
SoFi	Member benefits	4.7/5
ELFI	Personalized support	4.5/5

What are supplemental student loans? 

A supplemental student loan is used to fill in the gaps when you’ve maxed out federal direct student loans. You can use supplemental loans to cover educational expenses, including tuition, fees, room and board, transportation, and living expenses.

The two main types of supplemental loans are federal PLUS loans and private student loans. Some states also have loan programs for their residents or for students attending college in the state.

Like Direct Loans, you can apply for a PLUS loan by filling out the Free Application for Federal Student Aid (FAFSA). You’ll need to submit an application form to individual lenders for a private student loan. 

	PLUS loans	Private supplemental loans
Who can borrow	Parents of undergrads for Parent PLUS loans; Students seeking grad or prof. degrees for Grad PLUS loans (U.S. citizens or permanent residents)	Parents or students who are U.S. citizens or permanent residents
Loan limits	Cost of attendance minus financial aid w/ no maximum aggregate	Up to 100% of certified costs w/ various aggregate limits
Interest type	Fixed	Variable or fixed
Interest rates	9.08%	Current range is 3.99% to 16.85%*
Origination fees	4.228%	Varies, not charged by many lenders
Credit requirements	Credit check required with no adverse event allowed in the past five years	Credit check required; many lenders required a FICO score of 650+
Repayment options	Various plans available (standard, graduated, income-based)	Varies by lender, but fewer options are available
Application process	Complete the FAFSA	Apply with the lender

Federal supplemental student loans for college

Borrowers should always max out their federal direct student loans before turning to private student loans. Federal direct loans have more flexible repayment options, including income-driven repayment (IDR) plans. They also offer loan forgiveness programs, fixed interest rates, and longer deferment periods.

If you’re interested in a federal supplemental loan, your only option is a PLUS loan.

The maximum annual amount you can borrow is the cost of attendance minus other financial aid, so eligible students can use it to fund the entire remaining cost of graduate or professional school. Parents can take out Parent PLUS loans to pay for their child’s education if the child is an undergraduate student.

Private loans may be a solid option if you don’t qualify for a PLUS loan or you qualify for a lower interest rate.

PLUS loans

PLUS loans are federal supplemental student loans that provide additional money to cover the cost of higher education. The two types are Parent PLUS and Grad PLUS.

The biological, adoptive, or step-parents of undergraduate students can take out Parent PLUS loans. Grad PLUS loans are available to independent students who are pursuing a graduate or professional degree. However, they have loan limits; you can only borrow up to the cost of attendance minus other financial aid. 

Credit check requirements

Private student loans and PLUS loans are not based on financial need, but both require a credit check. To qualify for a PLUS loan, you can’t have an adverse event on your credit history within the past five years.

Adverse events include:

• Default 
• Bankruptcy
• Tax lien
• Collection
• Foreclosure
• Repossession 
• Wage garnishment

If you have an adverse event, you may still be able to qualify for a PLUS loan by adding an endorser. An endorser agrees to take over your student loans if you default, like a cosigner. There is no income verification for Federal PLUS loans, so be careful not to borrow more than you can repay.

Private supplemental student loans

Private loans are another way to fund your education if you’ve exhausted all your federal student loan options. Private loans have stricter credit requirements than PLUS loans. Borrowers need a steady income and a credit score of 650 to qualify. 

Because most students don’t meet these requirements, they often need to add a cosigner. This can be anyone willing to share in your debt responsibility as long as they meet the lender’s credit score and income requirements. 

Some private lenders don’t look at your credit score. Instead, they may consider your income, current major, projected postgraduation income, and GPA. These lenders often charge higher interest rates, so try to avoid them unless you have no other options for supplemental loans.

College Ave 

Sallie Mae

Earnest

SoFi

ELFI

How to find supplemental student loans

Here’s a step-by-step guide to help you navigate the system and find the best supplemental loan options. 

1. Fill out the FAFSA

To be eligible for all types of federal student loans, including PLUS loans, you must fill out the FAFSA. Before completing the FAFSA, you’ll need to apply for a Federal Student Aid ID (FSA ID) through the StudentAid website. 

Once you have your FSA ID, gather all the necessary information for the FAFSA, including:

• Social Security numbers for you and your parents
• Driver’s license numbers
• Dates of birth
• Federal income tax returns
• W-2 forms 
• Bank statements
• Investment records
• Records of untaxed income (child support, interest, veterans’ benefits)
• List of schools you’re applying to 

Completing the FAFSA will also determine whether you’re eligible for other types of financial aid, including grants, scholarships, and work-study programs. The FAFSA becomes available every year on October 1. The federal deadline for completing the FAFSA is June 30, but many universities set earlier due dates.

2. Review your federal student loan eligibility

After you submit the FAFSA, schools where you’ve been accepted will send you a financial aid award letter. This letter includes details on:

• The total cost of attendance
• How much your family is expected to contribute
• Scholarship and grant awards
• Federal student loans available
• Work-study options

These letters are typically sent between February and May, but depending on the school, they could arrive as early as November.

3. Calculate how much you still need to cover your school costs

The award letter will show how much you have left to pay to cover tuition after your financial aid is applied. However, this number may not be 100% accurate; you may want to do your own calculations and include additional expenses such as:

• Health insurance
• Transportation
• Groceries
• Personal care items
• Laptop, software, and other technology costs
• Moving expenses
• Study materials
• Supplies and tools required for specific classes

Once you’ve tabulated your budget, you can determine how much you need to borrow to cover all your costs. 

Determine how much you need without overborrowing

Erin Kinkade

CFP®

After following steps 1, 2, and 3 above, you should arrive at a reliable estimate of the additional amount you need. I also suggest walking through these steps with a parent, guardian, trusted family member, or friend to have a second pair of eyes on the amount. In addition, before making additional steps, consult with a financial aid officer at the school you’re attending. 

4. Fill out a PLUS loan application online

If you’re an independent student seeking a higher degree, you can apply for a Grad PLUS loan, online. Parents of undergraduate students can take out a Parent PLUS loan; they’ll also need to submit an online application. 

To complete the form, you’ll need:

• Date of birth for borrower and student
• Social Security numbers
• Address, phone number, and email address
• Driver’s license number(s)
• Employment information
• Annual income
• FSA ID number
• The amount you wish to borrow
• School name and contact information

Remember that all PLUS loan applicants are subject to a credit check; you must authorize this credit check before submitting your application.

5. If you still need funds, check whether your school has a list of recommended private lenders or a comparison tool

If you don’t qualify for a PLUS loan or your parents aren’t willing to take out a Parent PLUS loan, consider exploring private student loans. Ask your financial aid office whether it recommends any private student loans; many colleges compile a list of preferred lenders.

The lenders on this curated list are often the best starting point because the school has vetted them. This ensures you’re working with reputable companies that offer favorable interest rates and repayment terms. If you still need help finding supplemental loan providers, check out our picks for the best private student loans.

6. Consider state loan programs

Some states offer their own loan programs for residents or students attending a college within the state. For example, North Carolina provides NC Assist Loans to in- and out-of-state students, while Indiana offers loans to residents through the INvestEd loan program. 

Check with your school’s financial aid office to see what state loan programs may be available. 

7. Compare eligibility requirements and general loan terms from several lenders

Loan qualifications can vary between lenders. Look at each private lender’s requirements and make a list of lenders you qualify for. You can eliminate those with income or credit score requirements you don’t meet.

As you shop around for lenders, pay particular attention to those that allow prequalification without a hard credit check. They tend to have simple online applications you can complete quickly and let you know within minutes what loan terms you may qualify for—without damaging your credit score.  

Remember that the loan terms won’t be finalized until you complete a full application. The terms provided during prequalification may change after you’ve provided more detailed information to the lender.

8. Get quotes from lenders

After prequalification, you’ll complete a full application with your preferred lenders; this involves a hard credit check that will likely affect your credit score. 

If you submit applications to multiple lenders in a short period—typically 14 to 45 days—these will only count as a single credit inquiry. This period is called the “rate-shopping window.” This allows you to check and compare multiple offers to find the best one. 

Once you complete and submit the full application, you’ll find out whether you’re approved and what terms you’re eligible for.

9) Compare terms and choose a lender

Look through the final offers from each lender. Compare them based on:

• The amount available to borrow
• Interest rates (fixed vs variable, initial rate offered)
• Length of repayment period
• Loan origination, prepayment, and late payment fees 
• Repayment options, such as deferment and interest-only while in school
• Special features, including rate reductions for automatic payments
• Borrower protections in case of disability or financial hardship
• Availability of customer service and support
• Borrower ratings, reviews, and testimonials

Once you weigh your options and pick a lender, send in any required additional documentation. Then confirm with your school’s financial aid office that it’s received your private funding and applied it to your account.

Recap of supplemental student loans

Lender	Best for	LendEDU rating
Dept. of Education	Federal student loans	Not rated
College Ave	Best overall	5/5
Sallie Mae	Cosigners	4.8/5
Earnest	No fees	4.7/5
SoFi	Member benefits	4.7/5
ELFI	Personalized support	4.5/5