Federal Loans
When borrowing funds to pay for your education, federal loans offer a low-cost loan alternative with favorable
repayment options, making them an attractive place to start. Both Federal Stafford Loans and Federal Perkins Loans
are available to undergraduate and graduate students.
Federal Stafford Loans
There are two types of Federal Stafford loans, subsidized and unsubsidized.
Subsidized Stafford Loan
If you demonstrate financial need, you can borrow a Subsidized Stafford Loan to cover some or all of that need. For a
subsidized loan, the U.S. Department of Education pays the interest while you're in school at least half time, for the first
six months after you leave school, and during periods of deferment (when you are eligible to delay payments for qualifying reasons).
Unsubsidized Stafford Loan
An Unsubsidized Stafford Loan is not based on financial need. With this type of loan, you are responsible for paying interest
on the loan from the time the loan is disbursed until it's paid in full. You can pay the interest as you go along. Or, you can
allow the interest to accrue (accumulate)—for example, while you're in school—and have the interest added to the principal amount
of your loan later. This means the interest will be "capitalized." Keep in mind that if interest accumulates, the total amount you
repay will be higher than if you paid the interest all along.
To apply for a subsidized or unsubsidized Stafford Loan, you must submit your
Free Application for Federal Student Aid (FAFSA).
While the unsubsidized Stafford Loan is available to all students regardless of financial need, a FAFSA must be submitted for eligibility.
Federal Perkins Loans
A Federal Perkins Loans is another low-interest loan available to undergraduate or graduate students. This campus-based loan
uses government funds with a share contributed by the school. Your school will determine your eligibility for and the amount of
your Federal Perkins Loan and payment is made back to the school.
To apply for this loan program, you must complete a
Free Application for Federal Student Aid (FAFSA).
Your school's Financial Aid Office will then determine your eligibility for this program and help you with the process for obtaining funds.
Federal PLUS Loan
For parents of dependent undergraduate students, the Federal Parent Loan for Undergraduate Students offers an attractive
low-interest alternative to help pay for their children's education. A PLUS loan allows for parents to borrow up to the
full cost of education minus any financial aid received.
Banks, credit unions and savings and loan institutions offer this type of loan, so parents should speak to such lenders and
compare rates, repayment options, service and convenience. Additionally, interest on student loans is tax deductible, so parents
should also consult with their tax advisor.
Federal Student Aide Summary
The following is a summary of the U.S. Department of Education’s Federal Student Aid (FSA) programs that will help you pay
for school. Check with your school to find out which programs your school participates in.
| Federal Pell Grant |
Grant: does not have to be repaid |
Available almost exclusively to undergraduates; all eligible students will receive the Federal Pell Grant amounts they qualify for |
$400 to $4,050 for 2005-06 |
| Federal Supplemental Educational Opportunity Grant (FSEOG) |
Grant: does not have to be repaid |
For undergraduates with exceptional financial need; priority is given to Federal Pell Grant recipients; funds depend on availability at school |
$100 to $4,000 |
| Federal Work-Study |
Money is earned while attending school; does not have to be repaid |
For undergraduate and graduate students; jobs can be on campus or off campus; students are paid at least minimum wage |
No annual minimum or maximum award amounts |
| Federal Perkins Loan |
Loan: must be repaid |
5% loans for both undergraduate and graduate students; payment is owed to the school that made the loan |
$4,000 maximum for undergraduate students; $6,000 maximum for graduate students; no minimum award amount |
| Subsidized FFEL1 or Direct2 Stafford Loan |
Loan: must be repaid; you must be at least a half-time student |
Subsidized: U.S. Department of Education pays interest while borrower is in school and during grace and deferment periods |
$2,625 to $8,500, depending on grade level |
| Unsubsidized FFEL1 or Direct2 Stafford Loan |
Loan: must be repaid; you must be at least a half-time student |
Unsubsidized: Borrower is responsible for interest during life of the loan; financial need not a requirement |
$2,625 to $18,500, depending on grade level (includes any subsidized amounts received for the same period) |
| FFEL or Direct PLUS Loan |
Loan: must be repaid |
Available to parents of dependent undergraduate students enrolled at least half time |
Maximum amount is cost of attendance minus any other financial aid the student receives; no minimum award amount |
1 This type of Stafford Loan is from the Federal Family Education Loan (FFEL) Program. The loan is known as a FFEL (or Federal) Stafford Loan.
2 This type of Stafford Loan is from the William D. Ford Federal Direct Loan Program. The loan is known as a Direct Loan.
Federal Student Aid Information Center (FSAIC): 1-800-4-FED-AID (1-800-433-3243)
TTY users (for the hearing-impaired) can call 1-800-730-8913
Callers in locations without access to 800 numbers may call 1-319-337-5665 (this is not a toll free number)