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Federal Student Loans

Who Can Get Federal Student Loans

Anyone attending a four-year college or university, community college, or career school can apply for federal student aid, including:

  • Grants, which don’t need to be paid back;
  • Work-study, which is part-time work that allows students to earn money while in school; and
  • Federal student loans

Most federal aid is decided based on financial need. Students must submit the FAFSA® and meet several other basic eligibility requirements to qualify.

Parents may also apply for federal student loans, called Federal PLUS Loans. These loans can also be applied toward the student’s educational costs.

Types of Federal Student Loans
for Loans Disbursed Between July 1, 2016 and June 30, 2017
 Stafford for Dependent UndergraduatesStafford for Independent UndergraduatesStafford for GraduatesParentPLUSGradPLUS
Subsidized Interest
Rate (new loans)
3.76% 3.76% N/A 6.31% 6.31%
Unsubsidized Interest
Rate (new loans)
3.76% 3.76% 5.31% 6.31% 6.31%
Credit Check? No No No Yes Yes
Loan Limit 1st Year $5,5001, $3,5002 $9,5001, $3,5002 $20,5001, $8,5002 None None
Loan Limit 2nd Year $6,5001, $4,5002 $10,5001, $4,5002 $20,5001, $8,5002 None None
Loan Limit 3rd Year and Beyond $7,5001, $5,5002 $12,5001, $5,5002 $20,5001, $8,5002 None None
Demonstrate
Financial Need?
Yes – subsidized,
No – unsubsidized
Yes – subsidized,
No – unsubsidized
Yes – subsidized,
No – unsubsidized
No No

1Limit of combined subsidized and unsubsidized funds.
2Additional unsubsidized eligibility available for student whose parent is unable to obtain a PLUS loan.

Download Federal Student Loans Types Comparison PDF


Learn more about Federal Direct Loans.

Direct Stafford Loans

Direct Stafford Loans are typically the first type of loan borrowed once scholarship, grant, and work-study options have been exhausted.

There are two types of Stafford Loans: subsidized and unsubsidized.

The interest on subsidized loans is paid by the government while you're still in school.

Meanwhile, you are responsible for paying the interest that accrues on unsubsidized loans while you’re in school. If you don't pay on the interest while you're in school, it's added to your principal balance (capitalized) when you graduate or drop below half-time status.

Benefits:
No payments required while enrolled in school at least half-time and generous borrowing limits depending on years in school and degree status.

Eligibility:
Nearly all students are eligible for a Stafford Loan, regardless of credit. Whether the loan is subsidized or unsubsidized depends on financial need, as determined by the FAFSA.

Loan limits:
Stafford loan amounts increase each year you are in school. See the chart above for details.

Direct PLUS Loans for Parents

Parents may choose to offset the cost of higher education by obtaining loans to help pay for those expenses.

Benefits:
PLUS loans can help cover the educational expenses not met by federal student aid. Additionally, parents can defer payment on loans until after the student's graduation. As these loans are not need-based, parents don't need to demonstrate financial need to apply.

Eligibility:
Eligibility depends on a modest credit check. An endorser may be required if the borrower has adverse credit. Some schools require that a FAFSA be completed before a PLUS loan can be awarded, but some do not.

GradPLUS Loans for Graduate and Professional Students

This loan is specifically for students seeking a graduate or professional degree.

Benefits:
This loan is similar to the parent PLUS loan because it can cover the total amount needed for tuition and education-related expenses, minus other aid awarded, and payments may be postponed (deferred) until after graduation.

Eligibility:
A modest credit check is required for this type of loan. An endorser may be required if the borrower has adverse credit.

How to Apply

In order to receive federal financial aid, students must fill out the FAFSA as soon as possible after January 1 of each year they plan to attend school.

Parents can apply for a PLUS loan by completing a Direct PLUS Loan application and Master Promissory Note (MPN), and the school's financial aid office can provide additional instructions. The office may also offer the option of completing the PLUS application and MPN online at StudentLoans.gov.

Student Loan Servicers (Customer Service)

Once you’ve taken out a student loan, that loan is assigned to a loan servicer. The servicer processes your payments and helps you navigate paying back your loans, in addition to answering any questions you might have about your student loan account.

Nelnet provides customer service for federal student loans made by the Department of Education and for other lenders, and we are happy to help any way we can.

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