Types of Federal Loans

Stafford, PLUS, Perkins: As you look into federal loans, a lot of confusing terms get thrown around. The federal student loan system is easier to understand if you break it down.

Loan Type	Description
Federal Subsidized Stafford Loans	Based on financial need. Free Application for Federal Student Aid (FAFSA) required. Government pays interest while you're in school. Interest rate is fixed. Repayment begins six months after you graduate, leave college or drop to less than half time. Annual loan limits are set by federal government.
Federal Unsubsidized Stafford Loans	Not based on financial need. FAFSA required. You pay the interest Interest rate is fixed at 6.80%. Repayment begins six months after you graduate, leave college or drop to less than half-time. Annual loan limits are set by the federal government.
Federal Perkins Loans	Based on financial need. FAFSA required. Based on funding available to your school. No origination or guarantee fees. Interest rate is fixed at 5.00%. Repayment begins nine months after you graduate, leave college or drop to less than half time. Loan limit is determined by your school.
Federal Parent PLUS Loans	Parents can take out this loan on your behalf if you are dependent on them, an undergraduate student and enrolled at least half time. Parents must pass a credit check. Loan money is paid in multiple disbursements. Loans are not based on financial need. Parents pay the interest. Interest rate is fixed at 7.90%. Loan limit is equal to the cost of attendance minus other financial aid received.

Federal Stafford Loan Rates and Limits

The federal government sets the terms and conditions for all federal student loans. The rates and limits below apply to Federal Stafford Loans.

Subsidized Federal Stafford Loan Interest Rates
First Disbursement of a Loan		Interest Rate on the Unpaid Balance
Made on or after	And made before
July 1, 2010	July 1, 2011	4.50%
July 1, 2011	July 1, 2012	3.40%
July 1, 2012	July 1, 2013	6.80%
July 1, 2013	July 1, 2014	6.80%

These interest rates do not affect any prior loans made to borrowers; the terms and interest rates of those loans remain the same. These interest rates apply only to undergraduate subsidized loans; any unsubsidized Stafford Loan for the same undergraduate borrower would continue to be made at the current fixed interest rate of 6.80%.

Annual Stafford Loan Limits for Undergraduate Students (July 1, 2010 – June 30, 2011)
	Dependent Undergraduate	Independent Undergraduate^*
Freshman	$5,500 (maximum $3,500 in Subsidized Stafford Loan)	$9,500 (maximum $3,500 in Subsidized Stafford Loan)
Sophomore	$6,500 (maximum $4,500 in Subsidized Stafford Loan)	$10,500 (maximum $4,500 in Subsidized Stafford Loan)
Junior and Senior	$7,500 (maximum $5,500 in Subsidized Stafford Loan)	$12,500 (maximum $5,500 in Subsidized Stafford Loan)

^* If you're a dependent student whose parents applied for, but were not approved for, a Federal PLUS Loan (parent loan), you can borrow at the independent undergraduate level. Contact your financial aid office for details.