The Direct Loan Program has low interest loans that undergraduates, graduates and parents of dependent students may obtain from the Department of Education. This program includes the Federal Subsidized Stafford Loan, the Federal Unsubsidized Stafford Loan and the Federal PLUS Loan. These loan programs were created by Congress to help all eligible students and parents, with and without financial need, pay for the student’s educational expenses.
There are two types of Federal Direct Loans, subsidized and unsubsidized. Subsidized Loans are awarded on the basis of financial need. Financial need is determined by subtracting the Estimated Family Contribution (EFC), provided from the FAFSA, from the cost of attendance. If your financial need is not fully met through other forms of aid (including grants and scholarships), you are eligible for Subsidized Loan funds up to the remaining amount of your financial need or up to the loan limits based on your grade level, whichever amount is lower. The Federal Government will pay interest on a subsidized loan while you are in school and during your six-month grace period.
If you do not demonstrate financial need, you are eligible for a Federal Unsubsidized Direct Loan. If you accept the Unsubsidized Loan, interest will accrue while you are enrolled. You have the option of paying the interest while you are enrolled.
Biological or adoptive parents of a dependent undergraduate student may apply for a Federal Direct PLUS loan to help meet the student’s cost of attendance not covered by other financial aid. The Free Application for Federal Student Aid (FAFSA) is required and parents must complete a parent PLUS Loan application at StudentLoans.gov.
The Federal Graduate PLUS Loan program allows graduate and professional students to borrow at a lower fixed interest rate after the unsubsidized loan eligibility has been exhausted. The Federal Direct Graduate PLUS Loan can be used to pay for the total cost of attendance minus any financial aid you’ve been awarded. The Graduate PLUS Loan is largely dependent on the borrower’s credit rating and history. Graduate students must complete a Grad PLUS Loan application at StudentLoans.gov.
Parents are also required to pass a credit check when they are applying for the PLUS loan. If a parent’s application for a PLUS loan is denied based on the borrower’s credit history, the student may become eligible for an additional unsubsidized student loan. Freshmen and sophomore students can borrow up to $4000 in a Federal Direct loan, while juniors and seniors could borrow up to $5000.
Federal Direct PLUS loans have a fixed interest rate of 6.84% effective July 1, 2015 – June 30, 2016. Interest is charged from the date of disbursement until the loan is paid in full.
Alternative loans are private educational loans in the student’s name that help bridge the gap between the actual cost of your education and the amount the government allows you to borrow in its programs. Private loans are offered by private lenders and there are no federal forms to complete. Eligibility for private student loans often depends on your credit score. Lenders offer fixed and adjustable rates as well multiple repayment options. You may choose any lender of your choice. For your convenience, we offer FASTChoice alternative loan tool to help counsel and compare different lenders available.
The Federal Perkins Loan is a “need based,” revolving loan fund utilizing both federal and institutional funds. This award is a loan and must be repaid by the borrower. The interest rate is 5.0%, with interest and principal repayments deferred until 9 months after the student graduates or ceases at least half-time enrollment. Funding for the Perkins Loan is limited.