Types of Federal Student Loans

When considering aid alternatives, there is a definite order to follow.  If your total need isn’t met by scholarships, grants, and/or work-study, there are several kinds of low interest rate student loans to consider.

Federal Loans
Federal Stafford Loans are award on the basis of financial need and are regulated by the federal government.  You may be borrowing this loan from a bank and the federal government sets the interest rate and guarantees the loan for the bank. On July 1, important changes went into effect for all undergraduate Stafford loans. The Stafford interest rate dropped from 6.8% to 6.0% for subsidized loans and loan limits were increased. Students can now borrow $2,000 more in unsubsidized funds on top of their base amount. With a low fixed rate, it is important to maximize your Stafford Loan award.
Stafford loans available:

  • Subsidized Federal Loans

This is a need based long term, low interest loan designed to provide undergraduate students with funds to help pay for their education. Subsidized means the interest on the loan is paid by the government while a student is in school.

  • Unsubsidized Federal Loans

This is a non-need based, long term, low interest loan designed to provide undergraduate students who do not qualify for other financial aid but still need to borrow to pay for their education. Unsubsidized means students are responsible for the interest on a loan while in school; however payment can be postponed until after graduation. Additional unsubsidized loans for independent students may be requested according to the cost of attendance in certain programs.

Annual loan limits (1/2 of the loan for each full time semester):

Freshman:  $3500
Sophomore: $4500