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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: