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Loans 101




Loans 101

Types of Federal Student Loans

The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan). Under this program, the U.S. Department of Education is your lender. There are four types of Direct Loans available:

  • Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.

  • Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.

  • Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid. Eligibility is not based on financial need, but a credit check is required. Borrowers who have an adverse credit history must meet additional requirements to qualify.

  • Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.

Limits

Loan limits depend on whether you’re an undergraduate student, a graduate or professional student, or a parent.

  • If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.

  • If you are a graduate or professional student, you can borrow up to $20,500 each year in Direct Unsubsidized Loans. Direct PLUS Loans can also be used for the remainder of your college costs, as determined by your school, not covered by other financial aid.

  • If you are a parent of a dependent undergraduate student, you can receive a Direct PLUS Loan for the remainder of your child’s college costs, as determined by his or her school, not covered by other financial aid.

* Remember, you can borrow less than your school offers and can request more loan funds later if you need to. You should borrow only what you need.*

Responsible Borrowing

Independent vs. Dependent

Dependency Status


Federal Perkins Loan Program?

The Federal Perkins Loan Program provided money for college or career school for students with financial need. The authority for schools to make new Federal Perkins Loans ended on Sept. 30, 2017.


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