Federal Loans

Direct Loans

Direct Federal Loans are the most common form of government student loans, and are awarded to college students who file the Free Application for Federal Student Aid (FAFSA).

Direct loans come in two forms - subsidized and unsubsidized.

Subsidized Loans:

5.05% interest rate
Federal government pays interest while enrolled in school
Can borrow up to $5,500 per year depending on your academic year

Unsubsidized Loans:

5.05% interest rate
Interest accrues while in school
Can borrow up to $20,500 per year depending on your eligibility

Perkins Loans

A Federal Perkins Loan is a low-interest (5%) loan for both undergraduate and graduate students with financial need. Your school is your lender; the loan is made with government funds, and your school contributes a share.

You must repay this loan to your school.

Direct PLUS Loans

PLUS loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school.

PLUS loans can help pay for education expenses not covered by other financial aid.

The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program.

Here’s a quick overview of Direct PLUS Loans:

The U.S. Department of Education is your lender.
You must not have an adverse credit history.
The maximum loan amount is the cost of attendance (determined by the school) minus any other financial aid received.

THINGS TO CONSIDER BEFORE RECEIVING A LOAN

Federal student loans can help you pay your education expenses, but you need to borrow responsibly. It’s important that you do the following before you borrow.

Determine How Much You Should Borrow

Figure out how much money you will need to borrow to cover your education expenses for each year you’re in school. Any school that participates in the federal student aid programs is required to provide information on its cost of attendance and to offer a net price* calculator on its website.

The following factors will also affect how much you need to borrow:

• Where you plan to attend school (the cost of living is different depending on the city your school is in)

• The price of the school you plan to attend (the more expensive the school, the more likely it is you will have to borrow)

• The amount of financial aid your school can offer from its funds (some schools offer significant scholarships and grants to make the net price affordable even if the cost of attendance is high)

• Your expected graduation date and your future borrowing needs to get you through to graduation (you can get a rough estimate of your total borrowing needs by multiplying the amount you’re borrowing for one year by the length of your program)

For suggestions on reducing your college costs, visit StudentAid.gov/collegecost.

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