Students and parents can apply for three types of federal student loans, including: Subsidized, Unsubsidized, and Parent PLUS loans. Each of these loans have a fixed interest rate and can be re-paid over a period of 10-25 years, depending on the repayment plan you choose. Interest rates for all Federal loans are set each spring for new loans being made in the upcoming award year. These rates are tied to financial markets and are fixed for the life of the loan.
The amounts that students can borrow are determined by their dependency status. Student borrowers are not required to undergo a credit check. Parent borrowers must apply for PLUS loans and their credit is checked during that process. Students whose parents are turned down for PLUS loans might be able to borrow more money than their dependency status normally permits.
Direct Subsidized Loan
- A Direct Subsidized Loan is available to eligible students with financial need. The Federal Government pays the interest on the loan while the student is in school or in the grace period following the class. The student is allowed a six month grace period after leaving school before repayment must begin. Students who first borrowed Subsidized loans after July 1, 2013 can only receive Subsidized loans for 150 percent of the published length of their current program.
Direct Unsubsidized Loan
- A Direct Unsubsidized Loan is available to a student attending a participating post-secondary school. Eligibility for this loan is not based on financial need. The borrower can pay the interest while in school, during grace and deferment periods, or the interest can be accrued and added to the principle at the time of repayment.
Direct Parent Loan to Undergraduate Student (PLUS) Loans
- The Direct PLUS Loan is not based on financial need, but the borrower must be creditworthy. The amount of a PLUS loan cannot exceed the student's cost of attendance minus other financial need. Repayment must begin as soon as loan funds are disbursed.