What types of federal loan programs are available? Perkins, Direct Subsidized and Unsubsidized Stafford Loans, Direct PLUS (for parents and graduate and professional-degree students) and Direct Consolidation Loans (to combine federal education loan debts into a single loan).
What does “subsidized” mean? A loan for which a borrower is not responsible for the interest while in school or in a grace or deferment status. Includes Direct Subsidized, Direct Subsidized Consolidation Loans, Federal Subsidized Stafford Loans and Federal Subsidized Consolidation Loans.
What does “unsubsidized” mean? A loan for which the borrower is responsible for paying the interest regardless of the status of the loan. Interest on unsubsidized loans accrues from the date of disbursement through the life of the loan. Unsubsidized loans include Direct Unsubsidized Loans, Direct PLUS, Direct Unsubsidized Consolidation Loans, Federal Unsubsidized Stafford Loans, Federal PLUS and Federal Unsubsidized Consolidation Loans.
How has the federal student loan program changed recently? Until this month, it was a subsidy to banks. The federal government covered the cost of discounted interest rates and protected banks from loan defaults. This summer, Congress and President Obama approved a takeover of the entire program, eliminating the fees that were paid to banks and making the government the lender. On the web: www.sfgate.com/business/networth/article/Feds-take-over-student-loan- program-from-banks-3193888.php.
What are the maximum federal loan amounts? For Direct Stafford Loans: lifetime limit of $31,000 in both subsidized and unsubsidized, with no more than $23,000 in subsidized loans. PLUS loans equal the cost of attendance minus other aid.
What is the Federal Pell Grant program? Unlike loans, grants do not have to be repaid. The Pell maximum per year is $5,550.
Source: Student Aid on the Web, www.studentaid.ed.gov.