Student Loans in 2025

Student Loans in 2025: What You Should Know & Smart Ways to Handle Them

1. Student Loan Debt Is Higher Than Ever

The total U.S. student loan debt has surged to between $1.77 trillion and $1.80 trillion, affecting around 42–43 million Americans. Average debt per borrower ranges from $38,000 to nearly $42,000.
Private loans make up a small portion, but their interest rates often vary widely—anywhere from 3.2% to 18%, depending on creditworthiness.

2. Interest Rates for New Federal Loans

For loans disbursed in the 2025–2026 school year, fixed interest rates are:
- Undergraduate: 6.39% (down from 6.53%)
- Graduate: 7.94% (down from 8.08%)
- PLUS Loans: 8.94% (down from 9.08%)

3. Delinquency Rates Are Spiking

Since the pandemic relief ended and reporting resumed, Q1 2025 delinquency for federal loans jumped from under 1% to over 8%, with some reports showing 12–13% of balances were more than 90 days late.
By April, about 31% of borrowers required to pay were past due—nearly 5.8 million people. Up to 1.8 million may default by July 2025.
Collections resumed in early 2025, leading to wage garnishments and even interceptions of Social Security checks—affecting up to five million retirees.

4. Practical Steps to Manage Your Student Loans

Understand your loan details—loan type, balance, interest rate, and repayment plan. Many borrowers still don’t know what they owe.
Explore repayment plans—like SAVE or other income-driven options, but be aware these can change with new programs and court rulings.
Consider consolidation or refinancing—only if it truly lowers your rate and doesn’t eliminate government protections.
Monitor policy updates—changes in forgiveness programs or repayment assistance can affect your eligibility.

Final Thoughts

Student loan borrowing and missed payments are rising. But with smart strategies—like understanding your loans, choosing the right repayment plan, and staying informed—you can protect your credit and financial future.

Requirements for Student Loans (Federal and Private)

1. Federal Student Loan Requirements

To qualify for federal loans in the U.S., you must meet the following criteria:

Complete the Free Application for Federal Student Aid (FAFSA)
Submit a FAFSA annually—most aid, including federal loans, depends on this.
Be a U.S. citizen or eligible noncitizen
Eligible noncitizens include permanent residents, refugees, asylees, and certain visa holders.
Have a valid Social Security Number
Required in most cases.
Be enrolled at least half-time in an accredited, eligible program
The school must participate in federal aid programs.
Maintain satisfactory academic progress (SAP)
This varies by school (grades, credits completed, etc.).
Have a high school diploma, GED, or equivalent education
This includes approved homeschool programs.
Not be in default on any federal loan or owe a refund on a federal grant
You must meet these conditions to stay eligible.
Sign certification stating use of funds for education only
This is done via FAFSA or promissory note.
NO more requirements like Selective Service registration or criminal restrictions
These have been removed by updates to the FAFSA.

2. PLUS Loan Requirements (Grad and Parent PLUS)

For Grad PLUS or Parent PLUS loans:

U.S. citizen or eligible noncitizen, with valid SSN
Must pass a credit review
Adverse credit can be waived with a creditworthy cosigner.
Not be in default or owe a grant refund

3. Private Student Loan Requirements

Private lenders usually require:

Proof of enrollment
At least half-time status at a (usually) accredited school with federal aid eligibility.
U.S. citizenship or permanent residency
In many cases, international students must get a U.S. cosigner.
Credit score and income check
Most private lenders require a good credit score and sometimes minimum income; otherwise, a cosigner may be needed.
Age and residency requirements
Some lenders only work with applicants from certain states or above a certain age.

4. International Student Considerations

Federal loans are off-limits unless you’re an eligible noncitizen with proper status.
Private loans are possible, often requiring a U.S. cosigner with good credit and income.
Some specialized lenders offer no-cosigner loans, but options are limited.

5. What Can Disqualify You

You may lose eligibility if:

You default on a previous federal loan or owe a grant refund.
You don’t maintain academic progress, drop below half-time enrollment, or your immigration status changes.
You miss FAFSA deadlines—you must submit it annually.