Federal Student Aid
2010–11 Loan Programs Fact Sheet www.studentaid.ed.gov
Will you need a loan to attend college? If so, think federal aid first. Federal student loans usu-
ally offer borrowers lower interest rates and have more flexible repayment terms and options
than private student loans.
1. What is a federal student loan?
Federal loans are borrowed funds that you must repay with interest. A federal student loan al-
lows students and their parents to borrow money to help pay for college through loan programs
supported by the federal government. They have low interest rates and offer flexible repayment
terms, benefits, and options.
Beginning July 1, 2010, all new Stafford and PLUS loans will be made under the William D. Ford
Federal Direct Loan Program (Direct Loan ProgramSM). In the Direct Loan Program, the U.S. gov-
ernment is the lender, and loan funds are provided to students through their school.
2. What is a private student loan?
A private student loan is a nonfederal loan issued by a lender such as a bank or credit union.
Private student loans often have higher interest rates and loan fees than federal loans, usually
require a credit check, and do not provide the benefits of federal student loans. If you’re not
sure whether you’re being offered a private loan or a federal loan, look at the name of the loan:
does it include the word “federal”? If not, just ask the financial aid office at your school.
3. Why are federal student loans a better option for paying
for college?
Federal student loans offer borrowers many benefits not typically found in private loans. These
include low fixed interest rates, income-based repayment plans, cancellations for certain em-
ployment, and deferment (postponement) options, including deferment of loan payments when a
student returns to school. For these reasons, students and parents should always exhaust federal
student loan options before considering a private loan.
See the next page for the specific kinds of federal student loans that are available.
Federal Student Aid, an office of the U.S. Department of Education, ensures that all eligible students can
benefit from federally funded financial assistance for education beyond high school. We consistently champion
the promise of postsecondary education—and its value to our society.
www.studentaid.ed.gov
4. What kinds of federal student loans are available?
Federal Loan Program Program Details Annual Award Limits
(subject to change)
Federal Perkins Loan • Your college is the lender; payment is • Undergraduate stu-
owed to the college that made the loan dents: up to $5,500
• For undergraduate and graduate students • Graduate and
• Interest charged on this loan is 5% professional degree
• Funds depend on student’s financial need students: up to $8,000
and availability of funds at the college
Direct Subsidized • Must be at least a half-time student • Between $3,500 and
Stafford Loan • Must have financial need $8,500 depending on
• For undergraduate and graduate students grade level
• Borrower is not charged interest while in
college and during grace and deferment
periods
• Interest charged on this loan is 4.5% for
undergraduate students and 6.8% for
graduate students
• The U.S. government is the lender; pay-
ment is owed to the U.S. government
Direct Unsubsidized • Must be at least a half-time student • Between $5,500 to
Stafford Loan • For undergraduate and graduate students $20,500 (less any
• Borrower is responsible for all interest on subsidized amount
the loan including while in college and received for the same
during grace and deferment periods period) depending on
• Interest charged on this loan is 6.8% grade level and depen-
• The U.S. government is the lender; pay- dency status
ment is owed to the U.S. government
Direct PLUS Loans • For parents of dependent students Maximum amount is
for Parents • Borrower is responsible for all the cost of attendance
interest minus any other finan-
• Interest charged on this loan is 7.9% cial aid the student
• Must not have negative credit history receives
• The U.S. government is the lender; payment
is owed to the U.S. government
Direct PLUS Loans • For graduate and professional degree stu- Maximum amount is
dents cost of attendance
for Graduate and • Borrower is responsible for all the minus any other finan-
Professional Students interest cial aid the student
• Interest charged on this loan is 7.9% receives
• Must not have negative credit history
• Must have applied for annual loan maximum
eligibility under the Subsidized and Unsubsi-
dized Stafford Loan Programs before applying
for a Graduate/Professional PLUS Loan
• The U.S. government is the lender; payment
is owed to the U.S. government
For additional information on federal student aid, call 1-800-4-FED-AID or visit www.studentaid.ed.gov/funding.
June 2010
Federal Student Aid, an office of the U.S. Department of Education, ensures that all eligible students can
benefit from federally funded financial assistance for education beyond high school. We consistently champion
the promise of postsecondary education—and its value to our society.
