Types of Federal Loans
The William D. Ford Direct Loan Program administers Federal Direct Loans to eligible graduate students. Federal appropriation of dollars funds the Federal Perkins Loan. Some federal loans are need-based and others are not need-based.
- Direct Subsidized Loans (formerly Subsidized Stafford Loans) are awarded on the basis of demonstrated financial need as determined by federal regulations. Subsidized Direct Loans are federally guaranteed. They do not require a credit check. This type of loan was available to graduate students for loan periods prior to July 1, 2012. The annual limit for Subsidized Direct Loans for graduate students is $8,500 per academic year. The interest rate is fixed at 6.8%. The federal government pays interest on the loan until repayment begins.
- Direct Unsubsidized Loans (formerly Unsubsidized Stafford Loans) are not awarded on the basis of financial need. Unsubsidized Direct Loans are guaranteed and do not require a credit check. The annual limit for Unsubsidized Direct Loans for graduate students is $20,500 per academic year. The interest rate is fixed at 6.8%. Interest is charged during all periods, even during the time a student is in school and during grace and deferment periods. You can pay the interest while you are enrolled, or defer and capitalize it until repayment begins.
- Direct Graduate PLUS Loans are not awarded on the basis of financial need. The Grad PLUS Loan is a credit-based supplemental loan. A student must pass a credit review and must not have adverse credit, which is defined as:
- Federal Perkins Loans are available by federally appropriated dollars. Perkins loans are awarded to students based on an assessment of exceptional financial need as determined by the results from the FAFSA and the information contained on the Union Financial Aid Form. Perkins loans have a 5% fixed interest rate. Interest does not accrue during eligible enrollment or during the 9-month grace period.
Federal Loan Limits
Direct Subsidized/Unsubsidized Loans: The Aggregate Loan Limit for graduate students is $138,500. This means that the combined loan amounts received for both undergraduate and graduate programs may not exceed $138,500. No more than $65,500 of this aggregate amount may be in the form of Direct Subsidized (Stafford) Loans and no more than $73,000 of this aggregate amount may be in the form of Direct Unsubsidized (Stafford) Loans.
Grad PLUS Loans: The maximum amount of Grad PLUS a student may borrow in an academic year is calculated by subtracting maximum Direct Unsubsidized Loans and any other financial aid awards from the Cost of Attendance (Student Budget).
Federal Perkins Loan: The maximum annual Perkins Loan award for eligible graduate students is $8,000. The cumulative maximum a student may borrow is $60,000, including any undergraduate or previous graduate Perkins loans.
Federal Loan Fees & Interest Subsidy
Federal Direct Loans
- For Loan periods until July 1, 2012, Direct Stafford Loans had an origination fee of 1.0% and an up front rebate of 0.5% at the time the loan was originated. As a result, the actual amount deducted from the gross amount of the loan borrowed was 0.5%. This fee was deducted proportionately each time that a loan disbursement is made.
- For loan periods on or after July 1, 2012, the up front rebate has been eliminated. The 1% fee on the Unsubsidized Stafford Loan will be administered upon loan origination.
Direct Grad PLUS Loans:
- For loan periods until July 1, 2012, Direct Grad PLUS Loans had a 4.0% origination fee and an up front rebate of 1.5% at the time the loan is originated. As a result, the actual amount deducted from the gross amount of the loan borrowed was 2.5%. This fee was deducted proportionately each time that a loan disbursement is made. This rebate was added back to the principal balance if a student failed to make the first 12 monthly payments on time.
- For loan periods on or after July 1, 2012, the up front rebate has been eliminated. The 4% fee on Grad PLUS Loan will be administered upon loan origination.
Federal Interest Subsidy:
- The interest subsidy on Federal Direct Loans during the 6-month grace period on after graduation has been eliminated for loan periods on or after July 1, 2012. Unpaid interest accrued during such grace period will be added to the unpaid principal of the loan.
Federal Perkins Loans
There are no loan fees for Perkins Loans.