Understanding Student Loans
Student loans are the most common form of college financial aid.
Types of Student Loans
For student borrowers (no credit approval necessary for Stafford Loans):
- Federal Direct Subsidized Stafford Loans (needs-based eligibility for undergraduate students only; the government pays the interest for undergrad students while in school at least half-time.)
- Federal Direct Unsubsidized Stafford Loans (non-needs-based eligibility; the student is responsible for paying the interest.)
- Federal Direct Graduate PLUS Loans - For graduate or professional students (who meet the credit requirements and have applied for their annual loan maximum eligibility under the Federal Stafford Loan Program.)
- Private Student Loans – For students who need to fill the financial gap after scholarships, grants and federal aid.
For parent borrowers (who meet the credit requirements):
- Federal Direct Parent PLUS Loans – For Parents of undergrad students (who meet the credit requirements.)
How to apply for financial aid:Students:
- Read our Financial Aid Timeline to get a good idea of what steps to do and when to do it.
- Complete the Free Application for Federal Student Aid (FAFSA) at www.fafsa.gov. Your college will use the FAFSA to determine your eligibility for aid.
- More information on Understanding the FAFSA
- Then, you'll receive a financial aid award letter from your school. This will help determine your need to borrow.
- When you're ready to borrow, just contact your college's Financial Aid Office to begin the application process.
- Then you'll complete the Federal Direct Master Promissory Note (MPN), which is your contract for the loan.
- If you have a financial gap after scholarships, grants and federal aid, you may be eligible for a Private Student Loan.
How the money is paid
- Loan proceeds are sent directly to your college made co-payable from the lender in at least two separate disbursements.
- Loan proceeds will be released to you once the school has verified that you're enrolled at least half time and that your academic progress is satisfactory.
- Federal Direct Subsidized and Federal Direct Unsubsidized Stafford Loans:
- Repayment will begin six months after graduation or after dropping below half-time status.
- During school, the government pays the interest on a Federal Direct Subsidized Stafford Loan for (undergraduate students.)
- Borrowers with Federal Direct Unsubsidized Stafford Loans may elect to defer all payments until six months after graduation or change in status, or elect to begin interest-only or regular payments while in school.
- Federal Direct Parent PLUS Loans: Repayment begins within 60 days after the funds are disbursed. Deferment available upon request if student is enrolled at least half-time and for an additional six months after the student ceases to be enrolled at least half-time.
- Federal Direct Graduate PLUS Loans: Repayment begins within 60 days after the funds are disbursed. Payments can be deferred as long as a student is enrolled at least half time in a graduate or professional school.
Learn more about repayment, including your rights and responsibilities as a borrower.
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