Are Student Loans Secured or Unsecured?
Student loans are unsecured but unique. Federal and private rates compared with 2025-2026 data, repayment options, and forgiveness programs explained.
Key fact: Student loans are unsecured
No collateral is required for federal or private student loans. However, federal student loans carry unique protections and obligations (income-driven repayment, limited bankruptcy discharge) that make them very different from other unsecured debt.
Federal vs Private Student Loan Comparison
| Feature | Federal Student Loans | Private Student Loans |
|---|---|---|
| Secured or unsecured | Unsecured | Unsecured (usually) |
| 2025-26 interest rates | 5.50% - 8.05% (fixed) | 4% - 15% (fixed or variable) |
| Credit check required | No (except PLUS loans) | Yes - credit score and income matter |
| Cosigner required | No | Often yes for students without credit history |
| Income-driven repayment | Yes (SAVE, IBR, PAYE, ICR) | No (fixed payments only) |
| Loan forgiveness options | Yes (PSLF, IDR forgiveness after 10-25 yrs) | No |
| Deferment / forbearance | Extensive federal protections | Limited, lender-dependent |
| Bankruptcy discharge | Extremely difficult (undue hardship standard) | Difficult but slightly more dischargeable in recent case law |
| Annual loan limits | $5,500 - $20,500 (dependent students) | Up to cost of attendance |
Federal Student Loan Types and 2025-26 Rates
Direct Subsidized Loans
5.50%Direct Unsubsidized Loans
5.50% (undergrad) / 7.05% (grad)Direct PLUS Loans
8.05%Compare Private Student Loan Rates
After exhausting federal loans, compare private lenders for the lowest rates.
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Frequently Asked Questions
Are student loans secured or unsecured?
Student loans are unsecured loans. Neither federal nor private student loans require collateral. You do not need to pledge your future earnings, a cosigner's assets, or any property to get a student loan. However, unlike most unsecured debt, federal student loans are extremely difficult to discharge in bankruptcy, which gives lenders confidence to lend without collateral.
What are the current federal student loan rates for 2025-2026?
For the 2025-2026 academic year, federal student loan interest rates are: Direct Subsidized and Unsubsidized Loans for undergraduates at 5.50% APR; Direct Unsubsidized Loans for graduate or professional students at 7.05% APR; Direct PLUS Loans for graduate students and parents at 8.05% APR. These rates are fixed for the life of the loan and set annually based on the 10-year Treasury note yield plus a statutory add-on.
Should I take federal or private student loans?
Almost always take federal loans first. Federal loans have income-driven repayment options (payments capped at 5-10% of discretionary income), Public Service Loan Forgiveness, and various forbearance and deferment protections. Private loans are typically rigid and offer fewer protections. Only turn to private loans after exhausting federal loan limits. The exception is a borrower with excellent credit and a creditworthy cosigner who can qualify for private rates below 5%.
Can student loans be discharged in bankruptcy?
Federal student loans are exceptionally difficult to discharge in bankruptcy. You must prove 'undue hardship' under the Brunner Test, which requires showing you cannot maintain a minimal standard of living, your situation is unlikely to improve, and you have made good-faith repayment efforts. Courts have historically been strict. Private student loans have the same high bar but have been discharged more frequently than federal loans in recent years.
What is income-driven repayment (IDR)?
Income-driven repayment plans cap your federal student loan payment at a percentage of your discretionary income. The SAVE plan (Saving on a Valuable Education) caps undergraduate loan payments at 5% of discretionary income and forgives remaining balances after 10-25 years of payments. IBR, PAYE, and ICR are other IDR options. After 120 qualifying payments under PSLF (Public Service Loan Forgiveness), federal loans are forgiven tax-free for borrowers working for qualifying employers.