What is a loan?
- A loan is money that you borrow and have to pay back with interest later, over time.
- You do not have to accept all the loans offered to you—it’s ok to borrow what you need only.
- Two main sources of loans:
- Federal student loans
- Private student loans from banks, financial institutions, or other organizations
- Federal student loans usually have more benefits than private loans.
Main types of federal student loans:
- Direct Subsidized Loan
- For eligible undergraduate students with demonstrated financial need
- Up to $5,500 depending on grade level and dependency status
- The federal government pays interest on the loan until you begin to pay it off (when you become less than a half time student)
- Direct Unsubsidized Loan
- For eligible undergraduate, graduate, and professional students
- No requirement to demonstrate financial need
- Up to $20,500 (minus any subsidized amounts received for the same period) depending on grade level
- Interest begins to accrue at the time you receive the loan (the “disbursement date”)
- Interest accrues from the disbursement date until you pay off the loan in full
- Direct PLUS Loan
- For eligible parents and graduate or professional students through schools participating in the Direct Loan Program.
- For parents: called a “Parent PLUS Loan”
- For graduate or professional students: called a “Grad PLUS Loan”
- The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received.
- Before applying, make sure you’ve filled out the FAFSA form already
- Direct Consolidation Loan
- A Direct Consolidation Loan allows you to consolidate (combine) one or more federal education loans into a new Direct Consolidation Loan for the purpose of lowering your monthly payment amount or gaining access to federal forgiveness programs.
Applying for loans
- FAFSA or WASFA: If you submitted a FAFSA or WASFA form, types of loans and amounts that you’re eligible for would be included.
- If you submitted a WASFA, you’re eligible for state and institutional aid only, not federal aid
Additional learning resources for student loans
Student Loan Forgiveness
- In certain situations, you can have your federal student loans forgiven, canceled, or discharged. That means you won’t have to pay back some or all of your loan(s).
- The terms “forgiveness,” “cancellation,” and “discharge” mean essentially the same thing.
- Student Loan Forgiveness Webpage
Public Service Loan Forgiveness (PSLF) Program
- Working in public service, such as government service (federal, U.S. Military, state, local, or tribal) or certain non-profit organizations may qualify you for PSLF. Your employment may also qualify if your employer provides certain types of qualifying public services.
- The PSLF Program forgives the remaining balance on your Direct Loans (only your Direct Loans)
- Learn more about PSLF:
