Grants Versus Loans
The U.S. Department of Education provides over $100 billion in grants, loans, and work-study for college or career school each year.
Federal Student Aid for College or Career School - The U.S. Department of Education provides grants, loans, and work-study opportunities to eligible students attending participating colleges or career schools. The Department is the source of nearly 70 percent of all student aid awarded in the U.S. each year. The vast majority of the Department's aid is not based on academic merit. For further information and an online application, visit the Department's Web site at www.studentaid.ed.gov. Alternatively, you may call the Federal Student Aid Information Center toll free: 1-800-4-FED-AID1-800-4-FED-AID (1-800-433-32431-800-433-3243). TTY for the hearing-impaired is 1-800-730-89131-800-730-8913.
As with all federal student aid, you apply for Direct Loans by filling out the Free Application for Federal Student Aid (FAFSA). Most students use FAFSA on the Web to complete their applications. The information on your FAFSA is transmitted to the schools that you list on the application, and those schools use the information to assess your financial need for student aid.
The award package
Direct Loans are generally awarded as part of a larger award package which may contain other types of aid as well, to help you meet the costs of going to college or career school.
The Direct Loan Program offers the following types of loans:
- Subsidized: for students with demonstrated financial need, as determined by federal regulations. No interest is charged while a student is in school at least half-time, during the grace period, and during deferment periods.
- Unsubsidized: not based on financial need; interest is charged during all periods, even during the time a student is in school and during grace and deferment periods.
- PLUS: unsubsidized loans for the parents of dependent students and for graduate/professional students. PLUS loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods.
- Consolidation: Eligible federal student loans can be combined into one Direct Consolidation Loan.
- Student borrowers are not required to begin making payments until after they drop below half-time attendance
Below are the total limits for Direct Subsidized and Unsubsidized Loans:
- $31,000 for dependent undergraduate students excluding those whose parents are unable to borrow a PLUS Loan (no more than $23,000 may be subsidized)
- $57,500 for independent undergraduate students and dependent undergraduates whose parents are unable to borrow a PLUS loan (no more than $23,000 may be subsidized)
- $138,500 for graduate or professional students (no more than $65,500 may be subsidized; includes loans for undergraduate study)
These aggregate limits include both Direct Subsidized and Unsubsidized Loans and any subsidized and unsubsidized Federal Stafford Loans received through the Federal Family Education Loan (FFEL) Program.
With a Direct PLUS Loan, a graduate/professional student or the parent of a dependent student can borrow up to the cost of the student's attendance minus other financial aid the student receives.
Direct Subsidized Loans for undergraduates with a first disbursement date between July 1, 2009, and June 30, 2010: 5.6%
Direct Subsidized Loans for graduate students and Direct Unsubsidized Loans for all students: 6.8%
Direct PLUS Loans: 7.9%
Grants, unlike loans, do not have to be repaid. Click the links below to learn more about grant programs available for eligible students pursuing a postsecondary education.
Teacher Education Assistance for College and Higher Education (TEACH) Grant Program that provides grants of up to $4,000 per year to students who intend to teach in a public or private elementary or secondary school that serves students from low-income families
A Federal Pell Grant, unlike a loan, does not have to be repaid. Pell Grants are awarded usually only to undergraduate students who have not earned a bachelor's or a professional degree.
The Federal Supplemental Educational Opportunity Grant (FSEOG) program is for undergraduates with exceptional financial need.
The National Science and Mathematics Access to Retain Talent Grant, also known as the National Smart Grant is available during the third and fourth years of undergraduate study (or fifth year of a five-year program) to at least half-time students who are eligible for the Federal Pell Grant and who are majoring in physical, life, or computer sciences, mathematics, technology, engineering or a critical foreign language; or non-major single liberal arts programs.