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|
|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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