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Rachel Seitz

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What Are the Different Types of Student Loans?

According to the most recent reports, the total amount of student loan debt in the US is $1.48 trillion, spread out over 44.2 million Americans. Student loans are a part of many people’s lives, and at Climb, we want you to best understand all the options available and what they mean for you. So, we’ve got for you a quick run-down of all the different types of student loans!

Federal student loans

There are three broad categories a student loan can fall into, and within those categories are even more sub-categories of loans. The first category is federal student loans; for these, the federal government (or, more specifically, the US Department of Education) acts as the lender. The largest program within this is the William D. Ford Federal Direct Loan Program, thankfully often shortened to just Direct Loan Program. Through this program, you could receive five different subtypes of loans:

  • Direct Subsidized Loans, which are available to undergraduate students who demonstrate a financial need to receive secondary education at a college or trade school. With this loan, the student does not pay interest while in school, during the six months after leaving school, or during deferment.
  • Direct Unsubsidized Loans, which are available to undergraduate as well as graduate and professional students and do not require demonstrable financial need in order to qualify. With this loan, the student pays interest during all periods.
  • Direct PLUS Loans for grad students, which are available to graduate and professional students to cover educational expenses not covered by other financial aid.
  • Direct PLUS Loans for parents, which are available to parents of undergraduate students to cover educational expenses not covered by other financial aid.
  • Direct Consolidation Loans, which allow students to consolidate all eligible federal student loans into a single loan through one servicer.

Private student loans

The second category of student loans is private student loans. These are alternative sources of funding which are provided by banks or other lending institutions. These types of loans vary from lender to lender, so you’ll want to make sure you’re doing your research on all options and what their terms will mean for you. Things such as loan term length, APR and interest rates, and repayment terms all vary between lenders. Additionally, unlike federal student loans, private lenders all have their own unique qualification process. Each institution will have its own application process and requirements for eligibility. Many lenders (including Climb) will allow you to apply with a co-borrower — someone who may meet the criteria to qualify if the borrower does not and who agrees to take responsibility for the loan if in the future the borrower becomes unable to make payments.

Institutional student loans

The last of the types of student loans are institutional loans. With these types of loans, the school itself acts as the lender. As with private student loans, terms for institutional loans vary between schools, as well as their eligibility criteria. You’ll want to check with your school to see what they offer, if you would qualify, and how their loan compares to others.

When taking out a student loan, it’s in everybody’s interest to ensure all parties are well-informed of their options — including not just loans but also scholarships, grants, and work-study programs — and the impact it will have on them going forward. This was just an overview of broad categories of loans; before making a decision, be sure you’ve done your research. Read FAQs, look at testimonials, and ask any questions of your school and potential lenders to help you make the right choice for you!

Want to check out Climb’s private student loans? Click below for more information!

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Or, take a visit to our Help Center.

2 thoughts on “What Are the Different Types of Student Loans?”

  1. Generally, FHA will be easier to qualify for, but if you have great credit and the minimum threshold of income needed to qualify, then conventional will be the way to go! Again, make sure you are teamed up with a knowledgeable and experienced loan officer when you’re buying your first home.

    Reply

  2. Greetings! I’ve been reading your site for
    a long time now and finally got the courage to go ahead and give you a shout out from Austin Texas!
    Just wanted to tell you keep up the good job!

    Reply

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What to Expect: Realistic Outcomes

Climb’s Comprehensive Access Solution can offer a strategic balance of increased enrollments and upfront cashflows compared to traditional lenders. While no financing solution guarantees 100% collection, our data-driven approach maximizes both upfront cash and long-term repayment rates.

Typical Partner Results:

  • 15-30% of students qualify for Climb Loans with upfront tuition delivered to the school shortly after course start
  • 45-60% of students qualify for 0% APR* payment plans
  • Enrollment increases of 20%+ reported by partner schools**

**Results vary by school and student demographics. This represents performance reported by individual school partners and should not be considered a guarantee of your specific outcomes.

The bottom line: CAS is designed to maximize your net tuition recovery while eliminating the administrative headaches of student financing.

Maximizing Your Results

Pro Tip: Schools that require student deposits and set up automatic payments during enrollment see significantly better repayment performance across all financing options. These simple steps can meaningfully improve your outcomes.

FAQs

We use a comprehensive, AI-driven assessment that goes beyond traditional FICO scores to better serve career training students:

  • Climb Credit Score: Over 150 data points specifically designed for vocational students
  • Debt-to-Income Ratio: Reliable predictor of payment performance
  • FICO Score: Used primarily for interest rate assignment

Key advantages of our approach:

  • Soft credit pull until loan funding (no credit impact during application)
  • The majority of students receive instant decisions
  • Students can apply with co-borrowers directly in the application
  • More accurate placement into appropriate financing products

We use a comprehensive, AI-driven assessment that goes beyond traditional FICO scores to better serve career training students:

  • Climb Credit Score: Over 150 data points specifically designed for vocational students
  • Debt-to-Income Ratio: Reliable predictor of payment performance
  • FICO Score: Used primarily for interest rate assignment

Key advantages of our approach:

  • Soft credit pull until loan funding (no credit impact during application)
  • The majority of students receive instant decisions
  • Students can apply with co-borrowers directly in the application
  • More accurate placement into appropriate financing products

Students are placed into funding brackets (Elite, Standard, Enhanced) based on our AI assessment. Higher-credit students generate higher upfront payments to your school, while students with limited credit are seamlessly directed to our 0% Payment Plan.

These brackets are established using data from over $1 billion in career training loan originations and may be adjusted periodically based on updated repayment trends.

Important note: Regardless of which bracket a student falls into, they are considered fully paid by your school once funded. The student’s repayment obligation exists exclusively between Climb and the student.

Elite Access not available for Computer Science programs. Upfront percentages vary by industry and loan terms.

Once Climb disburses upfront funding for a student loan, that student is considered fully paid by your school. You will not receive any additional payments for that student—the single upfront payment is complete and final.

From that point forward, the student’s repayment obligation exists exclusively between Climb and the student. Your school has zero liability if the student defaults, and you keep the full upfront payment regardless of the student’s future payment performance.

They’re automatically offered our 0% Interest Payment Plan, ensuring no student is turned away while maintaining steady monthly cash flow for your school.

Higher-credit students generate larger upfront payments (75-100% of tuition), while students with limited credit use our 0% APR* Payment Plan for consistent monthly revenue. Both options are risk-free for your school

Absolutely. Climb complements existing payment options like scholarships, employer-sponsored programs, and internal financing.

Absolutely. Climb complements existing payment options like scholarships, employer-sponsored programs, and internal financing.

Typically, within 5-10 business days after your partnership agreement is signed.

Comprehensive onboarding webinar, continuous partner support via AI-assisted chat and live email—and real-time borrower assistance with our live-chat-available student success team.

No. Climb fully manages the administrative responsibilities—your team simply monitors your school’s performance via our intuitive School Portal.

Your school is fully protected either way. For Climb Loans, you keep the entire upfront payment with zero liability. For Payment Plans, you only receive what students actually pay, with no risk to your school.