Types of Federal Student Loans
About Federal Student Loans
The federal government currently offers these types of student loans to students and parents. Which one is right for you?
Types of Federal Student Loans
for Loans Disbursed between July 1, 2012, and June 30, 2013
| |
Stafford for Dependent Undergraduates |
Stafford for Independent Undergraduates |
Stafford Graduates |
PLUS Parents |
Grad PLUS |
Subsidized Interest
Rate (new loans) |
3.4% |
3.4% |
6.8% |
7.9% |
7.9% |
Unsubsidized Interest
Rate (new loans) |
6.8% |
6.8% |
6.8% |
7.9% |
7.9% |
| Credit Check? |
No |
No |
No |
Yes |
Yes |
| Loan Limit 1st yr. |
$5,500*, $3,500** |
$9,500*, $3,500** |
$20,500*, $8,500** |
None |
None |
| Loan Limit 2nd Yr. |
$6,500*, $4,500** |
$10,500*, $4,500** |
$20,500*, $8,500** |
None |
None |
| Loan Limit 3rd yr. and Beyond |
$7,500*, $5,500** |
$12,500* $5,500** |
$20,500*, $8,500** |
None |
None |
Demonstrate
Financial Need? |
Yes-subsidized,
No-unsubsidized |
Yes-subsidized,
No-unsubsidized |
Yes-subsidized,
No-unsubsidized |
No |
No |
*Limit of combined subsidized and unsubsidized funds. **Additional unsubsidized eligibility available for student whose parent is unable to obtain a PLUS loan.
Download Federal Student Loans Types Comparison PDF
Learn more about Federal Direct Loans.
Direct Stafford Loans
Federal Stafford Loans are typically the first type of loan that you will borrow to pay for school once you've exhausted all scholarship, grant, and work-study options.
There are two types of Stafford Loans—subsidized and unsubsidized. Subsidized loans are loans the federal government pays the interest on while you're in school. With unsubsidized loans, interest accrues from the time the loan funds are sent to the school, and you have the option to pay the interest as it accrues. If you don't pay on the interest while you're in school, it's added to your principal balance (capitalized) when it's time to repay your loan.
Benefits. Interest rates as low as 3.4%, no payments required while enrolled in school at least half-time, and generous borrowing limits depending on years in school and degree status.
Eligibility. Nearly all students are eligible for a Stafford loan, regardless of credit. Depending on financial need, as determined by the FAFSA, a Stafford loan may be subsidized (the government pays the interest while you are in school) or unsubsidized (you are responsible for the interest that accrues while you are in school).
Loan limits. Stafford loan amounts increase each year you are in school. See the chart above for details.
Direct PLUS Loans for Parents
Parents may choose to offset the cost of higher education by obtaining loans to help pay for those expenses.
Benefits. PLUS loans for parents have a fixed interest rate of 7.9% and can fill the gap remaining after Stafford loans and other financial aid—covering the entire cost of tuition, room and board, and other school-related expenses. Additionally, parents can defer payment on loans until after the student's graduation. These loans are not need-based, so your parents don't have to demonstrate financial need to apply.
Eligibility. Eligibility does depend on a modest credit check. An endorser may be required if the borrower has adverse credit. Some schools require that a FAFSA be completed before a PLUS loan can be awarded, but some do not.
GradPLUS Loans for Graduate and Professional Students
This loan is specifically for students seeking a graduate or professional degree.
Benefits. This loan is similar to the parent PLUS loan because it can cover the total amount needed for tuition and education-related expenses, minus other aid awarded. Interest rates on these loans are fixed at 7.9%, and payments may be postponed (deferred) until after graduation.
Eligibility. A modest credit check is required for this type of loan. An endorser may be required if the borrower has adverse credit.
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