Federal Student Loans
There are three types of loans available through the Federal Family Education Loan Program (FFELP) with interest rates well below average and special repayment schedules. The money you borrow must be used for any school costs including tuition, fees, books, supplies, or room and board.
Federal Subsidized Stafford Loans
Federal Stafford Loans are low interest loans for students enrolled at least half-time as an undergraduate/professional student in an eligible institution. These loans are available to those who qualify based on need or income. "Subsidized" means that the federal government will pay all interest on your loan until you begin repayment which starts automatically six months after you graduate or cease to be enrolled at least half-time.
Federal Unsubsidized Stafford Loans
Unlike Federal Subsidized Stafford Loans, Unsubsidized Stafford Loans are not based on need or income. Students and families of all income levels have access to federal guaranteed loans for college. Loan limits and interest rates are the same as the Subsidized Stafford Loan; however, you are responsible for all interest from the day the loan is made. Many lenders can capitalize the accrued interest (add it to the principal) when repayment begins. This saves you money because you will not be repaying "interest on interest" while in school.
Federal PLUS Loan
Federal PLUS Loans (Parent Loan for Undergraduate Students) are also available for your educational costs if you are enrolled at least half-time at an eligible institution, but the loan is made to your parents. Eligibility is not based on need or income, but parents must not have an adverse credit history. A parent may borrow up to the cost of education less any other financial aid awarded with repayment beginning within 60 days of loan disbursement.
GradPLUS Loan
Effective for loans certified by the educational institution on or after July 1, 2006, a graduate student or professional student may borrow a Federal PLUS loan. With benefits similar to the traditional PLUS loan for parents, the graduate student PLUS loan program (Grad PLUS) allows graduate students or professional students to borrow up to the cost of education at a particular institution minus any other financial aid. The Grad PLUS loan is meant to fill the gap between your financial aid package and the cost of education - your school must determine your Federal Stafford loan eligibility before you apply for a PLUS loan for graduate students. With the graduate student PLUS loan, the student is the borrower and not the parent.
Federal Student Loan Comparison Chart
|
|
Subsidized Stafford Loan |
Unsubsidized Stafford Loan |
PLUS/GradPLUS Loans |
|
Borrower |
Dependent or independent student |
Dependent or independent student |
Parents of dependent undergraduate students AND graduate/professional students borrowing for themselves |
|
Interest Rates |
6.8% fixed rate |
6.8% fixed rate |
8.5% fixed rate; some lenders offer lower fixed rates |
|
Eligibility |
Based on financial need |
No income restrictions |
No income restrictions |
|
Annual Loan Limits |
Yr. 1 - $3,500
Yr. 2 - $4,500
Yr. 3-5 - $5,500
Graduate or professional student - $8,500
|
Dependent student
Same as Subsidized Stafford less any amount of subsidized federal loans received
Independent student
Same as Subsidized Stafford plus these additional amounts up to the cost of education:
Year 1&2: $4,000
Year 3-5: $5,000
Graduate/professional: $12,000
|
Cost of education less any financial aid awarded |
|
In-School Interest |
Paid by federal government |
Paid by student borrower* |
Borrower responsibility |
|
Grace Period |
Interest paid by federal government during six-month grace period |
Interest paid by borrower during six-month grace period |
No grace period - parent borrower may request a forbearance while student is enrolled AND graduate/professional student may defer payments while enrolled |
|
Repayment Terms |
-
Repayment begins after grace period
-
$50 minimum monthly payment
-
10-25 year maximum repayment term (based on total loan balance) |
-
Repayment begins after grace period
-
$50 minimum monthly payment
-
10-25 year maximum repayment term (based on total loan balance) |
-
1st payment due within 60 days after loan is fully disbursed
-
$50 minimum monthly payment
-
10-25 year maximum repayment term (based on total loan balance) |
* Borrower has option of making interest payments while in school or waiting until repayment. Interest not paid during school will be capitalized one time at end of grace period.