Federal Student Loans

Unlock the benefits of federal loans and see how they compare to VSAC loans

Federal student loans may be offered as part of your school’s financial aid offer. These loans have many benefits—like low interest rates that remain fixed (unchanged) for the life of your loan. If you have financial need, the U.S. government may even pay the interest on your federal student loans while you’re enrolled in school.

Remember: You’ll still need to pay back these loans, with interest. So be sure to look carefully at the loan type and payment terms—and compare to other loans like VSAC’s Vermont Advantage Loans—before deciding whether to accept the offer. And remember—always borrow only the amount you need. 

Also, be sure to keep track of the loans you’re taking out as you go along—especially if you choose to postpone payments. Make a list of the loan type, principal balance, and interest rate. This information will come in handy if you later want to consolidate your loans or explore your eligibility for income-driven repayment plans

Learn more about these federal student loans:

Federal Perkins Loans for Students

Federal Direct Loans for Students

Federal Direct PLUS Loans for Graduate & Professional Students and Parents

Or, see how VSAC’s Vermont Advantage Loan compares to Federal Direct PLUS > 

FEDERAL PERKINS LOANS FOR STUDENTS

Federal Perkins Loans are low-interest student loans available to undergraduate, graduate, or professional degree students who:

  • Demonstrate exceptional financial need
  • Are enrolled in college or a career training program full- or part-time
  • Are enrolled in a school that offers Federal Perkins Loans
  • Meet other eligibility criteria

Your school will determine if you are eligible for a Federal Perkins Loan, based on the information reported in your Free Application for Federal Student Aid (FAFSA) and sometimes other factors. If you are eligible, the school will include a Perkins loan in your financial aid offer.

Tip: Accept a Perkins loan first—if it’s offered. Perkins loans offer benefits, including:

  • No loan fees
  • A low fixed interest rate
  • Government subsidy during school and for the first 9 months after you leave school, and during periods of deferment

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FEDERAL DIRECT LOANS FOR STUDENTS

Federal Direct Loans are available for undergraduate, graduate, or professional degree students who are enrolled in college or a career training program at least half-time (at least 6-8 credits per semester).

There are 2 types of Federal Direct Loans: Subsidized and Unsubsidized.

 

Federal Direct Subsidized Student Loans

Federal Direct Unsubsidized Student Loans

Financial need

You must demonstrate financial need to qualify.

You do not need to demonstrate financial need to qualify.
 

Paying interest

The U.S. Department of Education will pay the loan’s interest while you’re in school at least half time, for the first 6 months after you leave school, and during any periods of deferment.

You are responsible for paying the loan’s interest, as soon as the loan is disbursed.

Interest rate

4.45% fixed rate (July 1, 2017 – June 30, 2018)

Fees

1.069% (Oct 1, 2016 – Sept 30, 2017)

1.066% (Oct 1, 2017 – Sept 30, 2018)

Repayment options

  • Payment suspension and government subsidy while enrolled in school and during 6-month post-enrollment grace period
  • Payment suspension and government subsidy also available during periods of deferment in addition to income-driven plans
  • Payment suspension while enrolled in school and during 6-month post-enrollment grace period
  • Payment suspension also available during periods of deferment in addition to income-driven plans

Payment responsibilities

Student only

 

Your school will determine if you are eligible for a Federal Direct Subsidized or Unsubsidized Loan—or a mix of both—based on the information reported in your Free Application for Federal Student Aid (FAFSA) and sometimes other factors. If you are eligible, the school will include 1 or more Federal Direct Loans in your financial aid offer.

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FEDERAL DIRECT PLUS LOANS FOR GRADUATE & PROFESSIONAL STUDENTS OR PARENTS

Federal Direct PLUS loans are available to:

  • Graduate or professional students who:
    • Are enrolled at least half-time in an eligible school in a program leading to a graduate or professional degree or certificate
    • Do not have an adverse credit history
    • Meet the general eligibility requirements for federal student aid

Tip for graduate students: You may want to consider accepting a Graduate PLUS loan—if it’s offered—because of its flexibility. Grad loans have low fees, fixed interest rates, and flexible payment suspension options.

  • Parents who: 
    • Are taking the loan out for an undergraduate student enrolled at least half-time in an eligible school
    • Do not have an adverse credit history
    • Meet the general eligibility requirements for federal student aid (both parent and student)

Tip for parents:  A Parent PLUS loan offers some benefits—including flexible payment suspension options. Many education lenders offer loans with lower interest rates and fees than the federal government. Review your options and find what is best for your family situation.

Comparing the Direct PLUS Loan for Graduate Students vs the Direct PLUS Loan for Parents

 

Direct PLUS Loan for Graduate Students

Direct PLUS Loan for Parents

Interest rate

7.00% fixed rate (July 1, 2017 – June 30, 2018)

Fees

4.276% (Oct 1, 2016 – Sept 30, 2017)

4.264% (Oct 1, 2017 – Sept 30, 2018)

Repayment options

Payment suspension:

  • While enrolled in school
  • During 6-month post- enrollment grace period
  • During periods of deferment in addition to income-driven repayment plans 

Can request payment suspension:

  • While enrolled in school
  • During 6-month post- enrollment grace period
  • During periods of deferment
Payment responsibility

Student only

Parent

 

To apply for a Federal Direct PLUS Loan, you (if you are a graduate or professional student) or your student (if you are a parent) will first need to submit a Free Application for Federal Student Aid (FAFSA). 

Some schools will include a PLUS loan in their financial aid award notifications. Others will not. The school's financial aid office will provide instructions about their process for requesting a Direct PLUS Loan. It’s your choice whether to borrow some or all of this loan amount.

Parents, keep in mind: You may want to apply for a Federal Direct Plus Loan even if you have bad credit. If you are denied a PLUS Loan, your student may then be eligible for an additional amount up to $5,000 in federal Direct Unsubsidized Loans. Contact your school’s financial aid office if you receive a PLUS denial.

ALSO CONSIDER A VSAC VERMONT ADVANTAGE LOAN

You should also know that VSAC’s Vermont Advantage Student and Parent Loans offer better interest rates than the Federal Direct PLUS Loan and may be better financing options, depending on your situation.

See how VSAC’s Vermont Advantage Loan compares to Federal Direct PLUS >

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