Types of Federal Direct Student Loans

Subsidized loans – The interest for this type of loan is being paid (“subsidized”) by the federal government while you are enrolled at least half-time. The length of time that the interest will be subsidized is limited for first time borrowers effective July 1, 2013.  The amount you are eligible to receive is determined by a number of factors including; the results of your FAFSA, your grade level and the amount of subsidized loans previously received.  First time borrowers must complete an online entrance counseling session as well as a Master Promissory Note using the Department of Education’s website.

Unsubsidized loans – The interest for this type of loan is either paid by you while you are in school (recommended) or it is “capitalized”.  Interest capitalization is simply adding the accrued interest to the loan amount so that you can pay it later.  However, since this will result in you paying interest on interest, it is a more expensive option.  The amount you are eligible to receive is determined by your dependency status and grade level.

Parent PLUS loans – This loan is credit-based and only available to the parents of a dependent undergraduate student.  A credit check will be conducted each time a new loan is requested.  A parent who does not pass the credit check may elect to obtain a credit-worthy endorser or the student can receive additional unsubsidized student loan funds in his/her own name.  Parents who would like to apply for a Parent PLUS loan need to use their FSA ID complete the online PLUS Application process found at https://studentloans.gov/myDirectLoan/index.action.  First time parent borrowers will also need to complete the PLUS Master Promissory Note.

Graduate PLUS loans – This loan is credit-based and only available if you are enrolled in a graduate program of study.  A credit check will be conducted each time a new loan is requested. If you do not pass the credit check, you may elect to obtain a credit-worthy endorser.  To apply for a Grad PLUS loan, use your FSA ID to complete the online PLUS Application process found at https://studentloans.gov/myDirectLoan/index.action.  First time PLUS borrowers will also need to complete the Grad PLUS Master Promissory Note.