Types of Federal Student Loans

Federal Direct Loans are student loans that are provided to the student directly from the U.S. Department of Education.

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Federal Direct Loans

Federal Direct Loans are student loans that are provided to the student directly from the U.S. Department of Education. For the most part, any student loan distributed after July 1, 2010 is a federal Direct Loan. Four types of loans offered under this program:

  1. Direct Subsidized Loans
  2. Direct Unsubsidized Loans
  3. Direct PLUS Loans
  4. Direct Consolidation Loans

Stafford Loans

Stafford Loans are loans available to undergraduate students on the basis of financial needs. These types of loans are broken down into two different types: Direct Subsidized and Direct Unsubsidized Loans.

Subsidized Stafford Loan:

  • Available only to undergraduate students
  • No credit Check required
  • Federal Government covers the interest on these loans while student is in school at least half time
  • Monthly payments are not required until six months after leaving school

Unsubsidized Stafford Loan:

  • Available to Undergraduate and Graduate Students
  • No Financial needs assessment required
  • No Credit Check required
  • Interest is charged throughout the life of the loan
  • Monthly payments are not required until six months after leaving school

Dependent Undergraduates Rates for 2023 – 2024

  • First Year: $5,500 (including up to $3,500 in subsidized loans)
  • Second Year: $6,500 (including up to $4,500 in subsidized loans)
  • Third Year and beyond: $7,500 (including up to $5,500 in subsidized loans)

Annual Student Loan Limits for 2018 – 2019:

  • Independent undergraduates and dependent students whose parents are unable to obtain PLUS loans:
    • $9,500 as freshmen including up to $3,500 subsidized
    • $10,500 as sophomores including up to $4,500 subsidized
    • $12,500 as juniors and seniors including up to $5,500 subsidized
  • Graduate Students:
    • $20,500 or $40,500 for certain medical training

Aggregate Loan Limit

Aggregate loan limits are the maximum amount of federal student loans that the Department of Education will let a student borrow for their undergraduate and graduate study. Once the maximum amount is reached, the student will no longer receive financial assistance from the government. To complete their degree, the student will have to seek additional assistance through the use of personal loans.

  • Dependent Students: $31,000
  • Independent undergraduates and dependent students whose parents are unable to obtain PLUS Loans: $57,500
  • Graduate and Professional Students: $138,500 or $224,000 for certain medical training including undergraduate borrowing.

Interest Rates

Interest rates for undergraduate students are fixed at 5.05% for the entire life of the loan.

The interest rates for graduate students with unsubsidized Stafford Loans, are fixed for the life of the loan, but are a bit higher: 6.60%.

Plus Loans

Plus loans (Parent Loan for Undergraduate Students) are student loans provided to the parents of dependent students, but the funds are distributed directly to the student. Parents are responsible for the payment of these loans including interest.

  • Grad PLUS: Parent based loans for graduate students.
  • Both PLUS loans are available regardless of financial need, but credit checks are required. Cosigners can be used on these loans to cover the credit deficiency if required.
  • Interest rates are 7.60%
  • Loan Disbursement cost: 4.48% of the total loan. The disbursement cost is automatically deducted from the entire loan before the loan is deposited.
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