Loans

A loan is money you borrow and must pay back with interest. Below you can find information about different federal and private loan options.  

NEW RULES IMPACTING FEDERAL LOANS 

The One Big Beautiful Bill (also known as OBBB) impacts federal student loans starting July 1st, 2026. OBBB changes include:

• Lifetime loan limits for graduate students
• Graduate PLUS loans availability (no longer available for new students or new borrowers)
• Parent PLUS loan limits
• Federal loan eligibility for less than full time students
• Loan repayment options 

Learn more on our OBBB page. 

Federal Loans

The FAFSA is the application for federal student aid including federal student loans. Compared to private loans, federal student loans have lower interest and offer a greater variety of repayment plans. 

Federal Loans and Less than Fulltime Enrollment

Starting with the 26/27 school  year, all federal student loans except Parent PLUS loans must be prorated (reduced) for less than full time enrollment. This means a student may not receive the full amount of federal loans unless they enroll in full time classes. For Undergraduate and Post Baccalaureate students, this is a minimum of 12 academic credits per term and for Graduates, this is a minimum of 9 academic credits per term.

Federal Direct Subsidized/Unsubsidized Loans

Subsidized and Unsubsidized loans are federal student loans for FAFSA eligible students to help cover the cost of higher education. 

To be eligible for federal Direct loans students need:

• A processed FAFSA with good standing for federal aid
• Half time minimum enrollment
• Remaining eligibility within the federal annual and lifetime loan limits

The difference between a Direct Subsidized and a Direct Unsubsidized Loan:

• Direct Subsidized Loan: A need-based loan  available to undergraduate students who have financial need according to their FAFSA. The benefit of this loan is the federal government pays the interest while the student is in school. This loan can be deferred while a student is enrolled at least half time.
• Direct Unsubsidized Loan: available to both undergraduate and graduate students. This loan is not based on financial need. Interest begins accruing on this loan once the funds are paid. This loan can be deferred while a student is enrolled at least half time. 

New Starting 07/01/2026:

• Federal student loans will require proration for undergraduate and graduate students who are less than full time
• There are also new lifetime borrowing limits for graduate student borrowers who are not eligible for legacy borrowing consideration
• Find more about these changes on our OBBB page
   

Private Loans

Private student loans are non-federal loans from banks, credit unions, or other lenders, used to cover college costs. With the recent changes in federal loan eligibility more students are looking to the private loan market to fill the gaps. Deciding whether or not to take on private loan debt is a big possibly life altering decision. The information and resources below can help you explore how a private loan may fit into your education funding plan.

PSU recommends extreme caution when it comes to taking on private loan debt. These loans are far less flexible than federal loans when it comes to repayment and they are NOT eligible for federal loan benefits such as public service loans forgiveness.  Learn more about federal versus private loans. 

Comparing estimated earnings upon degree completion to estimated loan payments can help inform your decision. The College Scorecard can help you estimate how much you may earn once your degree is complete. You can compare that to the estimated monthly loan payments you will have from your loans using this basic monthly loan payment estimator.  

Selecting Loan Offers

PSU does not recommend any specific lender but you may use our FASTChoice tool to compare lenders on our historical lender list. Consider the following information when selecting your loan:

• APR (the annual percentage rate will vary by lender and may be fixed or variable)
• Additional fees
• Borrower requirements (does the lender require full-time enrollment, current term enrollment, good SAP, or a specific major?)
• Cosigner requirements and flexibility (lenders will vary on the cosigner requirement. Some lenders will also allow a cosigner to be removed from a loan after a certain number of payments)
• Death of a student or cosigner (Unlike federal loans, most private lenders do not discharge a cosigned loan if a student passes away. Private lenders may also have an auto-default clause. If a private loan includes this clause, the death of the cosigner can trigger an immediate default and an immediate repayment requirement for the student)
• Lender reputation and customer service record (there are many online lenders with fraudulent practices and poor track records when it comes to serving students. One place to check for lender rating and customer complaints is the Better Business Bureau)
• Repayment flexibility (Are there forbearance options if you can’t make payments? Are there income-based payment options? Is there in-school deferment? Do they allow additional enrollment deferment if you return to school after you graduate? Is there a pre-payment penalty? What is the grace period?)
• Repayment timeline (repayment timelines are generally between 5 and 20 years. Many lenders will not allow you to extend the timeline that is agreed to on the original loan)

Easy to use online tools such as Sparrow allow you to compare multiple private student loan offers with a soft credit check that does not impact your credit score. A downside of using this type of tool is that it requires you to input your personal data and their results may be biased towards certain lenders.

Steps to Receive a Private Loan

1. Apply Through a Lender: Compare lenders online and apply for the loan through a private lender. When applying for the loan, be sure that you request the loan for a single academic year and indicate a loan period that only includes the terms you plan to attend.
2. Certification: Your lender will usually send the application to PSU for certification. Certification is where the school verifies that students meet the lender criteria and that the requested amount fits within the student’s expected cost of attendance (COA). If the amount requested is over the COA, PSU must certify a reduced amount. To make sure the certified amount is correct, students should report their enrollment plan with a Revision Request form and should request COA changes as needed with the Excess Cost Appeal form. The certification process normally takes 1-2 weeks but it may take longer during peak processing times.
3. Right to Cancel Period: After certification is complete there is a loan right to cancel period that is usually around 10 days. Your lender will not send the funds to PSU until that right to cancel period is over.
    

PSU Short-Term Loans

Short term loans can be issued to students that are registered for at least one credit for the current term and meet the eligibility requirements. If you have questions about these loans, contact Student Financial Services.