Types of loans

Students can apply for one or more of the following loans:

Direct Subsidised and Unsubsidised loans

There are two types of Federal Direct Stafford/Ford Loans:

• Subsidised Direct Loan 
  • Offered on the basis of financial need, which is determined by the information you provide on the FAFSA (Free Application for Federal Student Aid)
  • Federal government pays interest on the loan until you begin repayment and during deferment periods
• Unsubsidised Direct Loan 
  • Not offered on the basis of financial need
  • Interest accrues from the date the loan is fully disbursed, though you can choose to pay it later if you are in an in-school, grace or deferment status
    • Choosing to not pay the accruing interest will add to the principal amount of paying the loan and will increase the amount you have to repay
    • Paying the interest as it accumulates means you repay less in the long run

Interest rates and origination fees

Interest rates and origination fees (opens an external site) for Direct Stafford/Ford Loans vary depending on the loan type, when you first borrowed the loan, and your degree status (undergraduate or graduate).

Loan limits (in US Dollars)

There are limits on the amount that you are eligible to receive each academic year. These are known as annual loan limits, and they are determined by Federal Student Aid.

Loan limits depend on:

• The year of study you are undertaking
• Whether your parent or parents are eligible for a Direct PLUS loans.

The Federal Student Aid website (opens external site) lists annual and aggregate loan limits for students accessing financial aid.

Students who are not eligible for a full subsidised loan

Students who are not eligible for a full subsidised loan may borrow their remaining eligibility under the unsubsidised program.

For example, an independent first-year undergraduate student whose parents are eligible to borrow a PLUS loan can receive USD $2500 of USD$3500 total eligibility under the subsidised Direct Loan Program. The borrower may be eligible for the remaining USD $1000 under the unsubsidised Direct Loan Program, making the total amount of unsubsidised eligibility USD$7000 under the base program.

PLUS Loans

Find out more about PLUS loans on the Federal Student Aid website (opens external site).

Direct PLUS loan for parents

• Allows a parent to borrow money to pay for a dependent student's college education
• Loan is in the parent's name and the parent (not student) is responsible for the loan
• No collateral is needed
• Requires a credit check, usually only looking for adverse credit

Loan limits

The annual maximum that may be borrowed under this program is the difference between the cost of education minus any financial aid received. There is no aggregate maximum; but it can never be more than the cost of attendance.

Direct PLUS loan for graduate or professional students

• For graduate and professional students
• Unlike parent PLUS loan, this loan is in the student's name and based on the student's credit rating.
• Loan enters repayment as soon as it is fully disbursed.
  • You can request deferment while in school.
  • For loans first disbursed on or after 1 July 2008, the student can request deferment while in school and until six months after he or she graduates, withdraws, or drops below half-time enrolment.
• Interest accrues beginning from the date the loan is fully disbursed, though you can choose to pay it later if you are in a deferment status.
  • If you choose not to pay the accruing interest, it will be added to the principal amount of your loan and will increase the amount you have to repay.
  • If you pay the interest as it accumulates, you will repay less in the long run.

To be eligible for a Direct PLUS loan you must:

• Complete the FAFSA (Free Application for Federal Student Aid) for the loan period
• Establish eligibility for the maximum annual amounts of Federal Stafford
• Not have an adverse credit history

Loan limits

The annual maximum that may be borrowed under this program is the difference between the cost of education minus any financial aid received. There is no aggregate maximum; but it can never be more than the cost of attendance.