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
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 .5 percent origination fee.
Unsubsidized Loans
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 .5 percent origination fee.
Borrowing Limits per School Year
| Students |
Subsidized |
Unsubsidized |
Total |
| Dependent Sophomore |
$4,500 |
$2,000 |
$6,500 |
| Dependent Junior/Senior |
$5,500 |
$2,000 |
$7,500 |
| Independent Sophomore |
$4,500 |
$6,000 |
$10,500 |
| Independent Junior/Senior |
$5,500 |
$7,000 |
$12,500 |
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).
