To disclose borrower rights and responsibilities, the federal government requires the completion of entrance loan counseling before loan funding is disbursed. Exit counseling is also required when a student ceases attendance.
Review additional information about loan limits, interest rates and the application process on the US Department of Education website.
- Direct Subsidized Loans – Subsidized loan eligibility is based on financial need. Interest is not paid on subsidized loans until the borrower enters repayment. Repayment commences after the borrower is no longer enrolled at least half time.
- Direct Unsubsidized Loans – Unsubsidized loans are available to students regardless of their financial need. Interest on unsubsidized loans will accrue if not paid while the borrower is enrolled. Repayment commences after the borrower is no longer enrolled at least half time.
Direct PLUS Loans for Parents of Dependent Students
- Parents of a dependent undergraduate student may apply for a Federal Direct PLUS loan. Repayment commences 30 days after the loan is fully disbursed.
- PLUS loan borrowers are required to pass a credit check. If a parent’s application for a PLUS loan is denied based on the borrower’s credit history, the dependent student may be eligible for an additional unsubsidized student loan.
Direct PLUS Loans for Graduate Students
- Graduate and Professional students may apply to borrow a Graduate PLUS loan after Federal Direct Loan eligibility has been exhausted. Repayment commences after the borrower is no longer enrolled at least half time.
- Graduate PLUS loan borrowers are required to pass a credit check.
Federal loans are generally the best options and should be your first consideration. Maximum interest rates and fees on federal loans are set by law, and terms and conditions are clearly defined.
However, private loans, also known as alternative loans, offer another borrowing option. Although the FASFA is not required, private loans may have varying interest rates and limited repayment options. Alternative loans are, therefore, considered a “last resort” lending option.
Applications for private loans are submitted directly to the lender. Many students are required to have a cosigner. Interest rates for loans are determined by the lender based on the student and cosigner’s credit worthiness.
For a list of private lenders and a comparison of the loan terms offered, visit FinAid’s private lender list.