Student Loans

TO RECEIVE FEDERAL loans, you have to file the Free Application for Federal Student Aid, or FAFSA. There are three main federal student loan programs:

Subsidized Stafford loans. These loans, which are awarded based on financial need, don’t incur interest while a student is in college. Repayment begins six months after graduation or, alternatively, if a student starts attending college less than halftime.

Unsubsidized Stafford loans. These loans, which aren’t awarded based on need, incur interest while a student is in college, though the interest can be added to the loan balance if a student is still attending school.

Students often end up with a mix of subsidized and unsubsidized loans, both of which charge 5.5% interest if disbursed during the 12 months through June 30, 2024. The total amount that can be borrowed is capped each year. For instance, for a first-year undergraduate who is considered a dependent student, total subsidized Stafford loans are capped at $3,500, with the possibility of borrowing another $2,000 in unsubsidized loans.

What if a student isn’t eligible for subsidized Stafford loans? He or she can always take out unsubsidized loans instead, potentially borrowing as much as $5,500 during the first year of college. In subsequent years, the annual amount that can be borrowed increases.

Perkins loans. These currently carry an interest rate of 5% and are only awarded to students with exceptional financial need.

Graduate loans. Federal loans for graduate or professional studies that are disbursed during the 12 months through June 30, 2024, levy a 7.05% interest rate. In addition, those seeking graduate or professional degrees can receive PLUS loans, covered in the next section.

Student loans may also be available from the college itself. The interest rate charged may be less than on federal loans. In addition, some states have set up agencies or nonprofit organizations that provide loans to students who are residents or who go to in-state colleges, and loans are also available from private lenders. For more information, check out and

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