Paying for College: Grants, Work-Study and Federal Loans (2026-27)

How the pieces fit

A school's aid offer starts from its cost of attendance (tuition, fees, housing, food, books, transportation and personal costs). Your Student Aid Index from the FAFSA is used to figure need-based aid. The usual building blocks are:

1. Gift aid: grants and scholarships. Generally not repaid.
2. Self-help aid: work-study and student loans.
3. Family resources: savings such as a 529, current income, and parent loans.

Total aid generally can't be more than the cost of attendance. Read each offer to see which parts are gifts and which are loans.

Grants and scholarships

Pell eligibility is limited to 12 semesters (or the equivalent) over a lifetime. State grants (such as Connecticut's Roberta B. Willis Scholarship and North Carolina's Next NC Scholarship) and the college's own aid are covered in the FAFSA guide. Scholarships from private groups have their own rules, and many have to be reported to the school.

Federal Work-Study

Part-time jobs for students with financial need, on or off campus, arranged through the school. You're paid as you work, so it doesn't lower the bill up front.

Federal student loans (Direct Loans)

Rates are for loans first disbursed July 1, 2026 through June 30, 2027 and are fixed for the life of the loan. Fees are for loans first disbursed October 1, 2026 through September 30, 2027 and are taken out of each disbursement.

Undergraduate yearly limits (unchanged on July 1, 2026)

A dependent student whose parent can't get a PLUS loan can borrow at the independent student limits. Federal student loans are borrowed in the student's name and don't require a credit check.

Parent PLUS loans after July 1, 2026

• All parents combined can borrow up to $20,000 a year per dependent student, after other aid is subtracted from the cost of attendance.
• The total for each dependent student is $65,000, counted even if loans are repaid or forgiven.
• Parents who already borrowed for that student before July 1, 2026 may keep the older limits for a limited time under an interim exception.
• New Parent PLUS loans can only be repaid under the Tiered Standard Plan.

Graduate and professional students

• Grad PLUS loans are closed to new borrowers from July 1, 2026. Students who already had a Direct Loan for their current program may keep borrowing for a limited time.
• Direct Unsubsidized limits: $20,500 a year and $100,000 total for graduate students, $50,000 a year and $200,000 total for professional students (not counting undergraduate loans).
• A $257,500 lifetime maximum applies to Direct Loans, not counting Parent PLUS.

Repaying loans made on or after July 1, 2026

• Tiered Standard Plan: fixed payments over 10 to 25 years, depending on the amount owed. The only option for new Parent PLUS loans.
• Repayment Assistance Plan (RAP): a new income-based plan for student borrowers.

Borrowers with only older loans have other options and transition dates. Check StudentAid.gov for your own loans.

Private student loans

Private loans come from banks, credit unions, states or schools rather than the federal government. Their rates, fees, credit requirements, cosigner rules and repayment options are set by each lender and often differ from federal loans. Federal repayment plans and forgiveness programs don't apply. Nothing here compares or recommends lenders.

Savings and tax credits

• 529 withdrawals for qualified expenses are tax-free. See the CHET and 529 guide.
• The American Opportunity and Lifetime Learning credits can offset part of what you pay. Coordinate them with 529 withdrawals and grants. See education tax credits.
• Scholarships and grants are tax-free when used for tuition, fees, books and required supplies, but amounts used for room and board are generally taxable (IRS Publication 970).