Loans may be a very good financial decision when it comes to investing in your future. While loans must be repaid, student loans have very low interest rates and some payments are deferred until you are finished with school.
Federal Direct Student Loans
Subsidized Loans are fixed at a 3.4 percent interest rate and are for students who demonstrate financial need. The federal government pays the interest while you are in school and for the six month grace period after graduation. There is a 1.5 percent origination fee.
Unsubsidized Loans are fixed at a 6.8 percent interest rate and are for all eligible students, regardless of income or assets. Students are responsible for paying all interest that accrues, even while in school. Students may choose to postpone paying the interest until graduation. There is a 1.5 percent origination fee.
Borrowing Limits per School Year
Federal Perkins Loans
Federal Perkins Loans are fixed at a 5 percent interest rate and are for students with exceptional financial need. The federal government pays the interest while you are in school and during the nine month grace period after graduation. Depending on when you apply for school, financial need and available funds, you may borrow up to $4,000 a year.
Federal PLUS Loans (dependents only)
Federal PLUS Loans help parents pay for a dependent’s college. A parent must complete the Federal Direct PLUS Loan application and master promissory note at www.studentloans.gov. This loan is credit-based and has a fixed interest rate of 7.9 percent. If denied, the student is eligible for more Unsubsidized Loans. (See independent limits above).
A Free Application for Federal Student Aid (FAFSA) must be completed for the student, using the student's and parent's information, before a Direct Parent PLUS loan can be processed.
To be eligible, a parent must:
- Be a biological or adoptive parent, or a step-parent whose information was required on the FAFSA.
- Be a U.S. citizen or eligible non-citizen, and provide a valid Social Security Number.
- Be credit-worthy.
To be eligible, a student must:
- Be dependent for purposes of financial aid.
- Be enrolled at least half-time.