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Federal Direct Subsidized Student Loan: “Subsidized” means the federal government pays the interest on these loans while the student is in school, during the grace period and during deferments (postponements of repayment). Students must show financial need to receive this type of loan. Federal Direct Unsubsidized Student Loan: “Unsubsidized” means the federal government does not pay the interest while the student is in school, during the grace period or in deferment. Students qualify for an unsubsidized loan regardless of financial need. Students are responsible to pay the interest on this loan quarterly or may choose to capitalize the interest.
Federal PLUS Loan (Federal Direct Parent Loan for Undergraduate Students):
These loans are non-need-based loans for parents with good credit histories
who want to borrow for their dependent students. Under this program,
parents can borrow up to the total cost of education minus other expected
financial assistance. There is no grace period or deferment period. This
means that interest begins to accumulate at the time the first disbursement
is made. Parents must begin repaying both principal and interest while the
student is in school. Generally, repayment begins within 60 days after the
second disbursement of the loan. |