Federal Student Loans

Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it. Federal student loans offer many benefits compared to other options you may consider when paying for college:

• The interest rate on federal student loans is fixed and usually lower than that on private loans—and much lower than that on a credit card!

• You don’t need a credit check or a cosigner to get most federal student loans.

• You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.

• If you demonstrate financial need, the government pays the interest on some loan types while you are in school and during some periods after school.

• Federal student loans offer options to postpone your loan payments if you’re having trouble making payments.

• If you work in public service, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.

Before you take out a loan, it’s important to understand that a loan is a legal obligation that makes you responsible for repaying the amount you borrow with interest. Even though you don’t have to begin repaying your federal student loans right away, you shouldn’t wait to understand your responsibilities as a borrower.

Watch the video below about responsible borrowing.

Direct Subsidized Loan

• Direct Unsubsidized Loans are available to undergraduate, graduate, and professional students; there is no requirement to demonstrate financial need.

• Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.

Who will pay the interest?

You are responsible for the interest on a Direct Unsubsidized Loan during all periods.

Direct Unsubsidized Loan

Types of Federal Student Loans

To receive a parent PLUS loan, you must

• Be the biological or adoptive parent (or in some cases, the stepparent) of a dependent undergraduate student enrolled at least half-time at an eligible school

• Not have an adverse credit history (unless you meet certain additional requirements)

• Meet the general eligibility requirements for federal student aid

  Note: Grandparents (unless they have legally adopted the dependent student) and legal guardians are not eligible to receive parent PLUS loans, even if they have had primary responsibility for raising the student.

Interest?

For Direct PLUS Loans first disbursed on or after July 1, 2026, and before July 1, 2027, the interest rate is 9.07%. This is a fixed interest rate for the life of the loan.

Additionally, there is a loan fee on all Direct PLUS Loans. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. The percentage for all Direct PLUS Loans first disbursed on or after Oct. 1, 2020, is 4.228%. Loans first disbursed before that date had different loan fees.

Direct PLUS Loans for Parents

• Direct Subsidized Loans are available to undergraduate students with financial need.

• Your school determines the amount you can borrow, and the amount may not exceed your financial need.

Who will pay the interest?

The U.S. Department of Education pays the interest on a Direct Subsidized Loan...

• while you're in school at least half-time

• for the first 6 months after you leave school (grace period)

• during a period of deferment