Federal Student Loan Types Explained Federal student loans are essential for many students to finance higher education, with different options suited to various needs. There are 4 main types of federal student loans:
Direct Subsidized Loans
Who Is Eligible: Undergraduate students in need of financial aid.
Interest Benefits: Under this Act, interest is paid by the government while a beneficiary of a loan is enrolled at least half-time,having their debt in deferment periods,while during the first six monthsfollowing graduation.
Loan Limit: Depends on what year a student is in school and the dependent status.
Direct Unsubsidized Loans
Eligibility: Available to undergraduate (first-time, nontransfer International students) and graduate (International student): independent and dependent status not exceeding. full-time Americans under $5k-40k.
Interest begins accruing as soon as the money is disbursed, even before you are finished in school.
Loan Limits: Maximum, depending on a student’s year in school and dependency statues.
Direct PLUS Loans
Types: Grad PLUS loans (Graduate or Professional Students) and Parent PLUS loans (Parents of Dependent Undergrads)
Must be credit-approved or have endorser to approve a loan with less than an adverse credit.
Loan Amounts: Maximum costs of the education less other financial aid
Direct Consolidation Loans
Need: Consolidating numerous federal loans together into one account with a united monthly payment.
Advantages: Easies your repays and can increase the time you have for repayment, reducing monthly payments
Eligibility: borrowers in repayment OR who are in default on federal loans
All are for specific purposes or populations, and all have eligibility requirements and benefits that students and families need to know about when it comes to paying for college.