Federal Direct Loan Programs
Eligibility for many loans is based on financial need as determined through information provided on the FAFSA. There are several types of loans available to students and their families.
► Loans Based on Financial Need
The following loans are based on financial need:
- Federal Direct Subsidized Loan — The most popular federal student loan, a Stafford Loan is awarded based on need as determined from information on the FAFSA form. The U.S. Department of Education pays interest while the borrower is in school and during any grace and deferment periods. The student must be at least a half-time student and have financial need. The annual loan limit ranges from $3,500 to $8,500 based on grade level.
First time borrowers on or after July 1, 2013 are subject to a time limit on Direct Subsidized Loans. Learn more.
- Perkins Loan — The Perkins Loan is another need-based loan program. Students must have filed their FAFSA by March 1 to be considered for this program. Interest charged on this loan is 5 percent. As long as a student is in school, the government pays the interest on the loan. Upon graduation, the student has a nine month grace period, and then a 10 year repayment period.
- Nursing Student Loan — The Nursing Student Loan programs provide long-term, low-interest rate loans to undergraduate students who have been admitted into the nursing program and have filed their FAFSA by March 1.
► Loans NOT Based on Financial Need
The following loans are not based on financial need:
- Federal Direct Unsubsidized Loan — Students must complete the FAFSA to be eligible for this loan program. This loan is given in lieu of, or in combination with, Direct Subsidized Loans. Terms are the same as the Stafford Subsidized Loan, except the borrower is responsible for the interest from the date of disbursement.
- Federal Direct Parent Loan for Undergraduate Students (PLUS) — Students must complete the FAFSA to be eligible for this loan program. The applicant is the student's parent, who is responsible to begin repayment almost immediately upon disbursement. If a parent is denied for this loan, the student may be eligible for a Stafford Unsubsidized Loan.
- Private Loans — Private Loans are generally in the name of the student; a FAFSA is not generally required for these loans. Often the student is the borrower, and may need to have a creditworthy co-borrower. Interest rates, repayment plans and deferment options vary widely among lenders. Be sure to "shop" for the option that is right for your situation since these are loans that are designed to bridge the funding gap when savings, scholarships, grants, federal loans, and other resources are not sufficient.
- The Graduate PLUS loan, or GradPLUS loan, is a low, fixed interest rate student loan guaranteed by the U.S. government. Students must complete the FAFSA to be eligible for this loan program. The Grad PLUS loan is a non-need credit based loan similar to a private student loan with the benefit of having a fixed interest rate and federal guarantee. The GradPLUS Loan allows graduate students to borrow the total cost for their graduate school needs, including tuition, room and board, books & supplies, and travel, less any other aid. GradPLUS payments can be deferred while you are in school.