Direct Subsidized Loans
Loan at the prevailing market interest rate at the time the student completes his or her loan application, but never more than 8.25%. It has a 1% origination fee which is deducted from the original balance requested. The federal government pays the interests on this loan while the applicant is studying. Repayment of this loan commences six months after the student ceases his or her studies, graduates, or has an academic load of less than six credits. Currently, the maximum amount awarded each year is $5,500 up to a cumulative total of $23,500.
Direct Unsubsidized Loans
This loan is meant to benefit students who do not qualify for Federal Direct Subsidized Loans, either completely or partially, due to a high income. The terms and conditions of this loan are the same as for the Subsidized Loan, except that the borrower is responsible for the interests accrued starting from the moment the loan is disbursed. At present, the maximum amount granted per year is $7,000, up to a cumulative total of $34,000. The total aggregate amount of subsidized and unsubsidized loans must not exceed a total of $57,500.
Direct PLUS Loans
This loan is aimed at parents of dependent students as well as graduate students. The student must be enrolled at least half-time. Financial need is not a requirement. This loan is awarded based on the applicant’s credit history and the cost of education. There is no subsidy nor is there a minimum annual amount. Parents may apply for a deferment while their child is enrolled at least half-time. Deferment may also be requested six months after the student graduates, leaves school, or drops below half-time enrollment. Interests are accrued.