Understanding Student Loans

Student loans are the most common form of college financial aid.

Types of Student Loans

For student borrowers (no credit approval necessary for Stafford Loans):

Federal Direct Subsidized Stafford Loans (needs-based eligibility for undergraduate students only; the government pays the interest for undergrad students while in school at least half-time.)
Federal Direct Unsubsidized Stafford Loans (non-needs-based eligibility; the student is responsible for paying the interest.)
Federal Direct Graduate PLUS Loans - For graduate or professional students (who meet the credit requirements and have applied for their annual loan maximum eligibility under the Federal Stafford Loan Program.)
Private Student Loans – For students who need to fill the financial gap after scholarships, grants and federal aid.

For parent borrowers (who meet the credit requirements):

Federal Direct Parent PLUS Loans – For Parents of undergrad students (who meet the credit requirements.)

Students:

Read our Financial Aid Timeline to get a good idea of what steps to do and when to do it.
Complete the Free Application for Federal Student Aid (FAFSA) at www.fafsa.gov. Your college will use the FAFSA to determine your eligibility for aid.
More information on Understanding the FAFSA
Then, you'll receive a financial aid award letter from your school. This will help determine your need to borrow.
When you're ready to borrow, just contact your college's Financial Aid Office to begin the application process.
Then you'll complete the Federal Direct Master Promissory Note (MPN), which is your contract for the loan.
If you have a financial gap after scholarships, grants and federal aid, you may be eligible for a Private Student Loan.

Loan proceeds are sent directly to your college made co-payable from the lender in at least two separate disbursements.
Loan proceeds will be released to you once the school has verified that you're enrolled at least half time and that your academic progress is satisfactory.

Repayment will begin six months after graduation or after dropping below half-time status.
During school, the government pays the interest on a Federal Direct Subsidized Stafford Loan for (undergraduate students.)
Borrowers with Federal Direct Unsubsidized Stafford Loans may elect to defer all payments until six months after graduation or change in status, or elect to begin interest-only or regular payments while in school.

Federal Direct Parent PLUS Loans: Repayment begins within 60 days after the funds are disbursed. Deferment available upon request if student is enrolled at least half-time and for an additional six months after the student ceases to be enrolled at least half-time.
Federal Direct Graduate PLUS Loans: Repayment begins within 60 days after the funds are disbursed. Payments can be deferred as long as a student is enrolled at least half time in a graduate or professional school.

Learn more about repayment, including your rights and responsibilities as a borrower.

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