Many families rely on federal student loans to help pay for college. This table describes features of the most common federal loans.
| Direct Unsubsidized Stafford Loan | Direct Subsidized Stafford Loan | Perkins Loan | Direct PLUS Loan (Parent/Grad) | |
|---|---|---|---|---|
| Description | A federal student loan available to students regardless of financial need | A federal student loan available only to students with demonstrated financial need | A federal student loan available only to students with the greatest financial need | A federal loan available to parents and graduate students with good credit histories regardless of financial need |
| Eligibility | Undergraduate and graduate students enrolled at least half-time | Undergraduate students enrolled at least half-time | Undergraduate and graduate students (can be enrolled less than half-time) | Parents of undergraduate students enrolled at least half-time, and graduate and professional students |
| Funds dispersed by | Federal government | Federal government | College | Federal government |
| Borrower | Student | Student | Student | Parent or graduate/ professional student |
| Based on financial need? | No | Yes | Yes | No |
| Interest rate for loans disbursed in academic year 2016/2017 | 3.76% fixed for undergraduates; 5.31% fixed for graduate students | 3.76% fixed | 5% fixed | 6.31% fixed |
| Interest subsidized? | No | Yes1 | Yes1 | No |
| Grace period | 6 months | 6 months | Generally 9 months | 6 months |
| Loan limits for academic year 2016/2017 | Dependent undergraduates: 1st year $5,500 ($3,500 subsidized), 2nd year $6,500 ($4,500 subsidized), 3rd to 5th year $7,500/year ($5,500 subsidized), $31,000 maximum
Independent undergraduates and dependent undergraduates whose parents don’t qualify for a PLUS Loan: 1st year $9,500 ($3,500 subsidized), 2nd year $10,500 ($4,500 subsidized), 3rd to 5th year $12,500/year ($5,500/year subsidized), $57,500 maximum Graduate students: $20,500 per year, $138,500 maximum including undergraduate loans |
Undergraduates: $5,500/year $27,500 limit
Graduate students: $8,000/year $60,000 limit (including undergraduate loans) |
Total cost of education, minus any other financial aid received | |
Over the past 10 years, the amount of borrowing increased 78% under the unsubsidized Stafford Loan program, 26% under the Parent PLUS Loan program, and a whopping 262% under the Grad PLUS Loan program.
Source: College Board, Trends in Student Aid 2016, Table 1
1 The federal government pays the interest on the loan while the student is in school at least half-time, in a grace period, or in a deferment period.
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