Subsidized vs. Unsubsidized

  • Loans are categorized as either being subsidized or unsubsidized. 
  • Subsidized loans are more desirable as mounting interest is suspended until a student has graduated and, as such, are much more difficult to receive. 
  • The determination of subsidization and amount depends on the lender’s calculation of family need.  In both cases the student is responsible for repayment.

Other Considerations for Loans

  • To receive federal aid, a student must generally be in attendance for what the school would consider a half-time credit load. Moreover, if need or attendance changes, funding will change.
  • All loans and grants are awarded year to year depending on student need and level of attendance. 
  • Aid limits, repayment time tables and amounts as well as interest rates can and do vary annually. Obtaining this information is an important part of the process, and web sites such as The College Board offer a wealth of information.

Student Loans

  1. the Federal Family Education Loan Program (FFELP)
  2. Direct Loans
  3. Perkins Loans
  • Every student is eligible for an either a subsidized or unsubsidized Federal Family Education Loan Program (FFELP), also known as the Stafford loan.
  • Direct Loans come from private lenders so determinants of funding considered will vary.
  • In both cases, interest is in the vicinty of 9% but it is not fixed.  Both come with flexible repayment plans.  The primary difference is source:  FFELP (Stafford Loans) are federally funded and Direct Loans come from private lenders.
  • Perkins loans carry fixed low interest rates, very favorable repayment terms, and a range orf total allotment between $4,000 and $20,000. 

Parent Loan for Undergraduate Students (PLUS) Loans

The Parent Loan for Undergraduate Students (PLUS) is the only loan where the parent is the responsible party for repayment.

  • It is similar to the FFELP and Stafford loans in having subsidized and unsubsidized forms, an interest rate capped at approximately 9% and an extended repayment period.  It has both federal and private lender forms as well.
  • There is no minimum amount and the maximum amount is the cost of attendance minus any other form of aid the student receives.