A Federal Direct Subsidized Loan is a type of federal student loan available to eligible undergraduate students who demonstrate financial need. The key feature that sets it apart from other loans is that the government pays the interest on the loan while the student is in school at least half-time, during the grace period after graduation, and during approved deferment periods.

This means students are not responsible for interest accumulation during these times, which can significantly reduce the total amount repaid over the life of the loan.

Who Is Eligible for a Subsidized Loan?

Not every student qualifies for a subsidized loan. Eligibility is based primarily on financial need, which is determined by information provided through the Free Application for Federal Student Aid (FAFSA). Factors such as family income, household size, cost of attendance, and other financial aid received are considered. Only undergraduate students are eligible for Federal Direct Subsidized Loans.

Graduate and professional students can apply for other federal loan types, but subsidized loans are reserved exclusively for undergraduates who need extra financial support.

Federal Direct Unsubsidized Loans are student loans offered by the U.S. Department of Education to help students pay for postsecondary education. Unlike subsidized loans, these loans do not depend on financial need. This means most students, regardless of their income level, can qualify. The main feature of unsubsidized loans is that interest starts accruing as soon as the loan is disbursed. Students must pay all interest, even while they are enrolled in school.

Eligibility Criteria

Federal Direct Unsubsidized Loans are available to a wide range of students. To qualify, applicants must:

• Be enrolled at least half-time in an eligible college or university
• Be a U.S. citizen or eligible noncitizen
• Have a valid Social Security number
• Maintain satisfactory academic progress
• Complete the Free Application for Federal Student Aid (FAFSA)

Because these loans are not based on need, many students who do not qualify for subsidized loans rely on unsubsidized loans to cover remaining education costs.

Loan Limits and Borrowing Amounts

The Federal Perkins Loan program was a campus-based student loan initiative funded jointly by individual universities and the federal government. Institutions no longer have the authority to issue new Perkins Loans, as the program officially ended on September 30, 2017. However, many students, including those at Stanford, still have outstanding Perkins Loans from previous years.Some key features of Perkins Loans include the fact that borrowers are not required to make payments while enrolled at least half-time in an accredited college or university.

Additionally, there is a nine-month grace period after leaving school before repayment begins, during which no payments are due. During both enrollment and the grace period, no interest accrues on the loan.Once the repayment period begins, the loan accrues interest at a fixed rate of 5%, and the standard repayment term is ten years, typically consisting of 120 monthly installments. Borrowers may also qualify for deferments, such as when enrolling in another degree program, experiencing unemployment, or meeting other conditions defined under Perkins Loan regulations.

Eligibility for Perkins Loans

Eligibility for a Perkins Loan was based primarily on financial need, as determined by the Free Application for Federal Student Aid (FAFSA). Schools used the FAFSA to calculate a student’s Expected Family Contribution (EFC) and determine the amount of aid needed to meet the cost of attendance.

Eligibility for Perkins Loans

A Federal Direct PLUS Loan is a government-backed education loan offered by the U.S. Department of Education to help cover higher education costs that are not met by other forms of financial aid. This loan program is available to parents of dependent undergraduate students as well as graduate or professional students who are considered independent. It is designed to bridge the gap between the total cost of attendance and the financial aid already received through grants, scholarships, or other federal loans. One of the defining features of the Direct PLUS Loan is that borrowers may request funding up to the full cost of education, as determined by the school, minus any existing financial assistance.

The cost of attendance may include tuition, housing, books, transportation, and other related educational expenses. This flexibility makes the PLUS Loan a useful option for families or students facing significant educational costs.Unlike need-based federal student loans, the Direct PLUS Loan is credit-based. Applicants must undergo a credit check to ensure they do not have an adverse credit history. While a specific credit score is not required, serious credit issues may affect approval. Interest on the loan begins accruing as soon as the funds are disbursed and continues throughout all semesters of enrollment.

There are two main types:

Parent PLUS Loans – for parents of dependent undergraduate students

Grad PLUS Loans – for graduate or professional students