But here's the difference between subsidized and unsubsidized loans —you are responsible for making interest payments even while you're in school. Any interest that is not made while you are in school or during the nine-month grace period after graduation is capitalized, which means it's added to your principal balance.
This program is intended to act as financial aid for undergraduate, graduate, and professional students. Unlike the other two programs, the borrower is the student's parent. Students must be enrolled at least half-time for a PLUS loan. Money goes to the school to cover education-related expenses before any remaining funds are disbursed to the borrower. The schools use your EFC to decide how much federal aid to offer you. They do that by subtracting your EFC from their cost of attendance COA , a number that includes tuition, room and board, fees, and related expenses.
In addition to some changes in the way the SAI is calculated, the change attempts to clarify what this figure actually is—an eligibility index for student aid, not a reflection of what a family can or will pay for postsecondary expenses.
To bridge the gap between your EFC and their COA, schools may offer you a package of financial aid that includes some combination of federal grants—known as Pell Grants —subsidized and unsubsidized Direct Loans, and paid work-study jobs. Like subsidized loans, grants are intended for students in significant financial need, but you don't have to repay them except in rare circumstances. Colleges may also offer other, non-federal aid, such as merit scholarships.
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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. What You Need to Know. Ways to Pay Off Loans. Loan Forgiveness. Loans Out of Control? Loan Basics Student Loans. Key Takeaways A Perkins loan was financial aid subsidized by the federal government for post-secondary students who demonstrated exceptional financial need. Perkins Loans must generally be repaid in the 10 years after graduation.
Those who work in certain public-service occupations may be eligible to have all or a portion of their Perkins Loan debt canceled. The government canceled the Perkins loan program in Article Sources. Sample disclosures from the Federal Reserve Board:. Sample Application and Solicitation Disclosure. Sample Approval Disclosure. Sample of Final Disclosure.
You can also get information about your student loans by checking your credit report. Be aware, however, that some loans, particularly older loans, may not appear on the credit report. Please visit our blog for the most up to date information on what this will mean for student loan borrowers.
Federal Loan Basics Can I get relief? Twitter Facebook LinkedIn. Federal Loan Basics. Get updates via email. Get Answers What type of loan do I have? Therefore, in wading through the vast amount of information, here are a few key points on the differences between the Stafford, Perkins, and PLUS loans.
Once you have a good understanding of how each loan works, as well as the advantages and disadvantages to each, it will be much easier to determine which may work the best in your particular college financial aid situation. Stafford loans are considered need-based government loans that are made directly to a college or university student as versus to their parents. When one uses funding through a Stafford loan, repayment is not required until after the student graduates.
There are essentially two ways that interest is determined on a Stafford loan. Perkins loans provide funds by way of a low-interest loan to both undergraduate and graduate students who have demonstrated an exceptional amount of financial need. These types of loans are made directly from the financial aid office of the college or university where the individual attends.
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