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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 Student & Parent 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 Direct Loans for Students
Federal Direct PLUS Loans for Graduate & Professional Students and Parents
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 | |
| Available to | Undergraduate students only | Undergraduate, graduate, or professional students |
| 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 | 5.50% fixed rate (July 1, 2023–June 30, 2024) for undergraduate students 7.05% fixed rate (July 1, 2023–June 30, 2024) for graduate or professional students | |
| Fees | 1.057% (Oct 1, 2020–Sept 30, 2024) | |
| Repayment options |
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| 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.
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 | 8.05% fixed rate (July 1, 2023–June 30, 2024) | |
| Fees | 4.228% (Oct 1, 2021–Sept 30, 2024) | |
| Repayment options | Payment suspension:
| Can request payment suspension:
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| 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 offer 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 LOAN
VSAC’s student and parent loans offer competitive fixed interest rates with no origination fees.
Learn more about VSAC’s Student & Parent Loans.