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Student loans, unlike grants and work-study, are borrowed money that must be repaid, with interest, just like car loans and mortgages. You cannot have these loans canceled because you didn’t like the education you received, didn’t get a job in your field of study or because you’re having financial difficulty. Loans are legal obligations, so before you take out a student loan, think about the amount you’ll have to repay over the years.
Your Federal Student Loans: Learn the Basics and Manage Your Debt can help you learn more about federal student loan debt. You can access this publication at www.FederalStudentAid.ed.gov.
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The College Cost Reduction and Access Act, enacted on Sept. 27, 2007, makes college more affordable for many students. For the latest information, and to see how the new law affects federal student loans visit www.FederalStudentAid.ed.gov, click on “Students, Parents and Counselors.” You’ll find the information you need in the “Announcements” section. |
| Student Loan Comparison Chart |
| Loan Program
| Eligibility
| Award Amounts
| Interest Rates
| Lender/Length of Repayment
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| Federal Perkins Loans |
Undergraduate and graduate students |
Undergraduate—up to $4,000 a year (maximum of $20,000 as an undergraduate)
Graduate—up to $6,000 a year (maximum of $40,000, including undergraduate loans)
Amount actually received depends on financial need, amount of other aid, availability of funds at school |
5 percent |
Lender is your school
Repay your school or its agent
Up to 10 years to repay, depending on amount owed |
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FFEL Stafford Loans (subsidized and unsubsidized)
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Undergraduate and graduate students; must be enrolled at least Half-time
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Depends on grade level in school and dependency status (see "Maximum Annual Loan Limits Chart—Subsidized and Unsubsidized Direct and FFEL Stafford Loans" chart)
Financial need is required for subsidized loans
Financial need not necessary for unsubsidized loans
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Fixed rate of 6.8 percent for loans first disbursed on or after July 1, 2006
Government pays interest on subsidized loans during school and certain other periods
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Lender is a bank, credit union or
other participating private lender
Repay the loan holder or its agent
Between 10 and 25 years to repay, depending on amount owed and type of repayment plan selected
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Direct Stafford Loans (subsidized and unsubsidized)
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Same as above
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Same as above
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Same as above
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Lender is the U.S. Department of Education; repay Department
Between 10 and 25 years to repay, depending on amount owed and type of repayment plan selected
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FFEL PLUS Loans
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Parents of dependent undergraduate students enrolled at least Half-time (see dependency status)
Graduate or professional degree students enrolled at least Half-time
Borrower must not have negative credit history |
Student’s Cost of Attendance
- Other aid student receives
_________________________
= Maximum loan amount
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Fixed rate at 8.5 percent for loans first disbursed on or after July 1, 2006; borrower pays all interest
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Same as for FFEL Stafford Loans above
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Direct PLUS Loans |
Same as above |
Same as above |
Fixed rate at 7.9 percent for loans first disbursed on or after July 1, 2006; borrower pays all interest |
Same as for Direct Stafford Loans above, except that Income Contingent Repayment Plan is not an option |
The information in this guide was compiled in summer 2007. For any changes to the federal student aid programs since then, visit www.FederalStudentAid.ed.gov and click on “Students, Parents and Counselors.” Any new information will appear in the “Announcements” section.
- Federal Perkins Loans are:
- Made through participating schools to undergraduate, graduate and professional degree students.
- Offered by participating schools to students who demonstrate the greatest financial need.
- Made to students enrolled full-time or part-time.
- Repaid by you to your school.
- Stafford Loans are for undergraduate, graduate and professional degree students. You must be enrolled as at least a Half-time student to be eligible for a Stafford Loan.
There are two types of Stafford Loans: subsidized and unsubsidized. You must have financial need to receive a subsidized Stafford Loan. Financial need is not a requirement to obtain an unsubsidized Stafford Loan. The U.S. Department of Education will pay (subsidize) the interest that accrues on subsidized Stafford Loans during certain periods. These loans are made through one of two U.S. Department of Education programs:
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William D. Ford Federal Direct Loan (Direct Loan) Program. Loans made through this program are referred to as Direct Loans. Eligible students and parents borrow directly from the U.S. Department of Education at participating schools. Direct Loans include subsidized and unsubsidized Direct Stafford Loans (also known as Direct Subsidized Loans and Direct Unsubsidized Loans), Direct PLUS Loans, and Direct Consolidation Loans. You repay these loans directly to us.
Federal Family Education Loan (FFEL) Program. Loans made through this program are referred to as FFEL Loans. Private lenders provide funds that are guaranteed by the federal government. FFEL Loans include subsidized and unsubsidized FFEL Stafford Loans, FFEL PLUS Loans and FFEL Consolidation Loans. You repay these loans to the bank or private lender that made you the loan.
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- PLUS Loans (Direct or FFEL) are loans parents can obtain to help pay the cost of education for their dependent undergraduate children. In addition, graduate and professional degree students may obtain PLUS Loans to help pay for their own education.
- Consolidation Loans (Direct or FFEL) allow student or parent borrowers to combine multiple federal education loans into one loan with one monthly payment. (See page 33 for more information on these loans.)
Whether you (or your parents) receive a FFEL or Direct Loan depends on which program the school you attend participates in. Most schools participate in one or the other, although some schools participate in both.
It’s possible for you to receive both Direct and FFEL Loans but you can’t receive the same type of Direct or FFEL Loan for the same period of enrollment at the same school. Some schools use one loan program for Stafford Loans and another loan program for PLUS Loans. For example, a graduate or professional student could receive a Direct Stafford Loan and a FFEL PLUS Loan for the same period of enrollment at the same school.
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