Federal Loan Types
There are three Federal Loan types:
- Direct Subsidized (also known as Stafford Subsidized)
- Direct Unsubsidized (also known as Stafford Unsubsidized)
- Direct PLUS Loans
Direct Subsidized and Unsubsidized Loans
- Direct Subsidized and Unsubsidized Loans are partly subsidized by the US Government. Information on interest rates and repayment terms can be found on the US Department of Education website.
- The Budget Act of August 2011 resulted in loss of eligibility of Graduate/Professional students for subsidized loans with effect from 1 July 2012. Direct Subsidized Loans are now available only to Undergraduate students, while Direct Unsubsidized Loans will be available to both Undergraduate and Graduate/Professional students.
- The maximum loan amounts differ for Dependent undergraduates, Independent undergraduates and Graduate/Professional students. These are shown below along with the aggregate lifetime maximum loan limits.
Stafford Loan Limits 2012/13
|
|
Subsidized |
Unsubsidized |
Combined Maximum |
|
Dependent Undergraduates |
|
|
|
|
1st Year |
$3,500 |
$2,000 |
$5,500 |
|
2nd Year |
$4,500 |
$2,000 |
$6,500 |
|
3rd Year and Up |
$5,500 |
$2,000 |
$7,500 |
|
Independent Undergraduates |
|
|
|
|
1st Year |
$3,500 |
$6,000 |
$9,500 |
|
2nd Year |
$4,500 |
$6,000 |
$10,500 |
|
3rd Year and Up |
$5,500 |
$7,000 |
$12,500 |
|
Graduate/Professional Students |
|
|
|
|
Each Year |
N/A |
$20,500 |
$20,500 |
Aggregate lifetime maximum loan limits
|
|
Subsidized |
Sub and Unsub combined Maximum |
|
Dependent Undergraduates |
$23,000 |
$31,000 |
|
Independent Undergraduates |
$23,000 |
$57,500 |
|
Graduate/Professional Students |
N/A |
$138,500 |
Direct PLUS Loan for Graduate students
- If you are a Graduate student and you have taken out the maximum value of Direct Unsubsidized Loans, you can also apply for a Direct PLUS Loan to top up your finances. PLUS Loans are normally available to make up the difference between the Unsubsidized Loan amount and the full cost of attendance of your programme, minus any scholarships.
- If you wish to apply for a PLUS Loan, you need to complete the PLUS Request Process on the US Department of Education website. Interest rates and repayment terms can also be found there. The request process involves a credit check and depending on the results of your credit check you may need a parent to endorse your PLUS Loan application.
Direct PLUS Loan for parents of Undergraduate students
- Parents of Dependent Undergraduate students can take out a Parent PLUS loan to make up the difference between the Subsidized/Unsubsidized Loan amount and the full cost of attendance of your programme, minus any scholarships.
- If your parent wishes to apply for a PLUS Loan, they need to complete the PLUS Request Process on the US Department of Education website. Interest rates and repayment terms can also be found there. The request process normally involves a credit check. Repayments start at the beginning of the loan period.
Loan Repayment
|
|
Repayment |
Deferment |
Interest |
|
Stafford Loans
|
Stafford Loans enter repayment after a six month grace period which begins once a student completes study |
Repayments can be deferred whilst you are studying at least half –time |
Interest accrues from date of disbursement Interest does not accrue during deferment period if the loan is subsidised |
|
Direct PLUS Loans
|
PLUS loans enter repayment once the loan is fully disbursed (paid out) |
PLUS Loans can be deferred while you are studying at least half-time and for six months after you cease studying |
Interest accrues from date of disbursement |
An Overview of The Loan Process
