Types of Loans (Are you looking for money?)
Your Guide to Federal Stafford and PLUS Loans
A college education is a major investment. Fortunately, financial aid is available to help almost everyone manage the cost. While it is best to use as much savings or free financial aid as possible to pay for your education, you may still need to borrow money.
This brochure provides information on Federal Stafford and Federal PLUS Loans. If you would like additional information, contact your lender or the financial aid office at the school you plan to attend. You may also contact the Oklahoma Guaranteed Student Loan Program (OGSLP) at www.ogslp.org or by calling the OGSLP borrower hotline at 800.442.8642.
Topics Found in this Guide
What types of federal student loans are available?
How do I apply for a federal student loan?
How much can I borrow?
What are the interest rates for federal student loans?
When do I have to start repaying my federal student loan, and how much will I pay?
Check out these additional borrowing tips
What types of federal student loans are available?
The Federal Family Education Loan Program
(FFELP) offers three types of federal loans:
Subsidized Federal Stafford Loans are low-interest loans that are based on financial need.
Interest is paid by the federal government while you are attending school at least half-time,
during the six-month grace period following graduation or a change in enrollment status, and
during specified loan deferment periods.
Unsubsidized Federal Stafford Loans are low-interest loans that are not based on financial
need. You are responsible for all interest accrued on unsubsidized loans from the date the loan is
disbursed, including the time that you attend school and during grace periods and any type
of loan deferment.
Federal PLUS Loans are low-interest loans made to parents of dependent undergraduate
students (parents must be the biological or adoptive
parent of their dependent) and to graduate or professional students. PLUS loans are not based on financial need. A PLUS loan’s repayment
period begins upon the final disbursement of the loan, and the borrower is responsible for all
accrued interest.
How do I apply for a student loan?
Federal Stafford Loans
To receive a Federal Stafford loan, you must attend an eligible school at least half-time. Also, you
must be a U.S. citizen or an eligible non-citizen. To apply for a student loan, as well as to find out
if you are eligible for federal grants and work-study, you must complete a Free Application for
Federal Student Aid (FAFSA). You can complete the FAFSA online at www.fafsa.ed.gov. You can
also obtain a paper copy of the FAFSA by calling toll-free 800.4.FED.AID, visiting any financial aid office and most public libraries, or by calling OGSLP at 800.442.8642.
After you complete and return the FAFSA to the U.S. Department of Education, you will receive a Student Aid Report (SAR). At that time, you must review the SAR to ensure that all information submitted is correct. The information from the SAR will then be sent electronically to the school(s) listed on your FAFSA. After all application materials are complete, the financial aid office will notify you of your eligibility for federal student aid, including any loan eligibility.
Federal PLUS Loans
To apply for a Federal PLUS loan, parents and graduate or professional students should contact their
lender or the financial aid office at the school, college or university the student plans to attend.
Parent applicants do not have to show financial need to qualify and are not required to complete the FAFSA. However, all graduate and professional student applicants must first complete the FAFSA. Applicants with an unfavorable credit history are not usually eligible for a Federal PLUS loan.
What do I need to do to get a federal student loan once my eligibility is confirmed?
If you are eligible for a Stafford Loan (subsidized or unsubsidized), you will be given a Master Promissory Note (MPN), which is a legal agreement of repayment between you and your lender. The school may deliver the MPN in a paper or electronic format. After your loan has been approved, the lender will send the loan funds to your school.
With the MPN, you may be eligible to receive multiple loans under one note for a maximum 10-
year period.
Federal Stafford Loans
The following charts show the maximum loan amounts for a full academic year. Your financial need, other sources of aid, cost of attendance and length of academic year - which is defined by your school - may affect the amount you can borrow.
Grade Level |
Total Subsidized & Unsubsidized |
First Year |
$3,500 |
Second Year |
$4,500 |
Third-Fifth Year |
$5,500 |
Graduate/Professional |
N/A |
Grade Level |
Subsidized Limit |
*Unsubsidized Limit |
|---|---|---|
First Year |
$3,500 |
$7,500 |
Second Year |
$4,500 |
$8,500 |
Third-Fifth Year |
$5,500 |
$10,500 |
Graduate/Professional |
$8,500 |
$20,500 |
Health Professions |
$8,500 |
$47,167 |
* Less amount borrowed under Subsidized Loan Program
Note: Your annual Federal Stafford loan eligibility is determined by each school’s financial aid office. Please contact your financial aid office if you have questions about eligibility. The unsubsidized Federal Stafford loan amount that a health professions student may borrow annually is based upon the student’s academic program and the length of the enrollment period (9 or 12 months).
In addition to the maximum amounts you can receive each year, Federal Stafford loans have an overall total aggregate limit that you cannot exceed.
Classification |
Total Loan Limit |
|---|---|
Dependent Undergraduate |
$23,000 |
Independent Undergraduate |
$46,000 |
Graduate /Professional |
$138,500 |
Health Professions |
$189,125 |
Federal PLUS Loans
A school’s financial aid office determines how much can be borrowed. The amount depends
on the school’s cost of attendance (includes tuition, fees and an estimate of other expenses
reasonably related to attending school) and any other financial aid the student may receive.
The loan cannot exceed the cost of attendance.
Non-Federal Alternative or Private Loans
Many lenders offer loans outside the federal loan program; these
are called “alternative” or “private” loans. These loans allow you to
borrow money to cover the gap between the cost of your
education and the amount of financial aid you receive in the form
of grants, scholarships, and federal student loans. Terms and
conditions and eligibility requirements for these loans vary by
lender. Since alternative or private loans can have higher interest rates and
may offer fewer flexible repayment options, you should consider
them only after you’ve exhausted all of your federal loan options.
What are the interest rates for student loans?
Federal Stafford and PLUS loans have fixed interest rates. This means the interest rate will remain constant for the life of the loan. Federal Stafford loans have an interest rate of 6.80 percent, and Federal PLUS loans have an interest rate of 8.50 percent.
Subsidized Federal Stafford loans – the federal government pays the interest while you are in school at least half-time or in a grace or deferment period.
Unsubsidized Federal Stafford loans – you are responsible for the interest while you are in
school or in a grace or deferment period. You may either make interest payments while you are
in school or have the interest added to the principal of the loan. Each time the lender adds the
unpaid interest to your loan’s principal, the total amount you repay, and possibly your monthly payment, will increase.
Federal PLUS loans – borrowers are responsible for paying all interest on the loan from the date the loan is disbursed.
Are there any fees on Federal Stafford and PLUS loans?
Yes. For Stafford loans, the lender deducts 2.5 percent from the amount borrowed for origination and default fees. Of this 2.5 percent, the Department of Education receives 1.5 percent, and the guarantor collects the remaining 1 percent.
For PLUS loans, the lender deducts 4 percent from the amount borrowed for origination and default fees. Of this 4 percent, the Department of Education receives 3 percent and the guarantor collects the remaining 1 percent.
Federal student loans offer a variety of services to borrowers, including flexible repayment options, money management tools, and exceptional customer care. These fees help cover the administrative expenses that make this low-cost, full service loan program possible.
When do I have to start repaying my federal student loan, and how much will I pay?
When do I have to start making payments, and how much will I have to repay on my Federal
Stafford loan?
Repayment of your Federal Stafford loan begins six months after you graduate or drop below
half-time enrollment. This six-month period, called a grace period, gives you time to find a job.
At the end of your grace period, you must begin making payments. The minimum monthly
payment is $50, but you may have to make a higher monthly payment depending on how much
you have borrowed. Unless you receive a deferment or forbearance, you will have a maximum of 10 years to pay
off your loan. Eligible borrowers with more than $30,000 to repay will have 25 years. A deferment is an
authorized period of time during which you may postpone either principal payments or principal
and interest payments. The federal government makes interest payments on subsidized Federal
Stafford loans and certain consolidation loans during authorized deferment periods.
Check with your financial aid office or lender for more information about repaying your student loan. There are several repayment options for you to consider. Contact your lender immediately if you have problems making your monthly payments, because you may be able to delay your payments by getting a deferment or forbearance. A forbearance is an authorized period of time during which the lender agrees to temporarily postpone or reduce your payment. You are still responsible for the accrued interest during this period. A forbearance may be granted at the lender’s discretion if you intend to repay your loan but are having temporary financial difficulties. Your lender can provide you with options to help – but you have to ask!
Use the following chart to get an idea of the monthly payment amounts needed to pay off your student loan. This chart illustrates the required $50 minimum monthly payment, 6.80 percent interest rate and 10-year repayment period.
For example: If you borrowed a total of $10,000 in Federal Stafford loans with a 6.80 percent
interest rate and a repayment period of 10 years, you would pay $3,810 in interest;
therefore, the total amount you would have to repay over the 10 years would be $13,810.
Note: Federal Stafford loans disbursed prior to July 1, 2006, have variable interest rates that will change annually, but will not exceed 8.25 percent. However, Federal Stafford loans first disbursed on or after July 1, 2006, have a fixed interest rate of 6.8 percent.
Loan Amount |
Minimum Monthly Payment |
Total Interest Paid |
Total Amount Paid |
|---|---|---|---|
$1,000 |
$50 |
$64 |
$1,064 |
$5,000 |
$58 |
$1,905 |
$6,905 |
$7,500 |
$86 |
$2,857 |
$10,357 |
$10,000 |
$115 |
$3,810 |
$13,810 |
$12,000 |
$138 |
$4,572 |
$16,572 |
$15,000 |
$173 |
$5,714 |
$20,714 |
$20,000 |
$230 |
$7,619 |
$27,619 |
$30,000 |
$345 |
$11,429 |
$41,429 |
$40,000 |
$460 |
$15,239 |
$55,239 |
$50,000 |
$575 |
$19,048 |
$69,048 |
When do Federal PLUS borrowers have to start making payments on their loan?
The first payment on a Federal PLUS loan is due within 60 days after full disbursement unless the
borrower qualifies for a deferment. The deferment process may be automatic for graduate or professional students enrolled in school on at least a half-time basis. If parent borrowers are interested in a deferment, they must contact the lender
about the eligibility requirements. The minimum monthly payment is $50. However, the actual
payment will depend on the total amount borrowed. Generally, borrowers have a maximum of
10 years to pay off the loan.
The following chart gives an idea of the monthly payment amounts on a Federal PLUS loan.
For example: If you borrowed a total of $10,000 in Federal PLUS loans with an 8.50 percent
interest rate and a repayment period of 10 years, you would pay $4,878 in interest;
therefore, the total amount you would have to repay over the 10 years would be $14,878.
Note: Federal PLUS loans disbursed prior to July 1, 2006, have variable interest rates that will change annually, but will not exceed 9.00 percent. However, PLUS loans first disbursed on or after July 1, 2006, have a fixed interest rate of 8.50 percent.
Loan Amount |
Minimum Monthly Payment |
Total Interest Paid |
Total Amount Paid |
|---|---|---|---|
$1,000 |
$50 |
$80 |
$1,080 |
$5,000 |
$62 |
$2,439 |
$7,439 |
$7,500 |
$93 |
$3,659 |
$11,159 |
$10,000 |
$124 |
$4,878 |
$14,878 |
$12,000 |
$149 |
$5,854 |
$17,854 |
$15,000 |
$186 |
$7,317 |
$22,317 |
$20,000 |
$248 |
$9,757 |
$29,757 |
$30,000 |
$372 |
$14,635 |
$44,635 |
$40,000 |
$496 |
$19,513 |
$59,513 |
$50,000 |
$620 |
$24,391 |
$74,391 |
Is there a way to consolidate my federal education loans?
The Federal Consolidation Loan program enables you to combine all of your federal education
loans into a single, more manageable loan, allowing you to make one monthly payment and
extending your repayment period up to 30 years depending on the loan amount. You may also
be able to secure a low fixed interest rate for the life of the loan. Consolidation loans are not
for everyone. Consider the advantages and disadvantages, and determine if
a consolidation loan is best for you. Visit www.ogslp.org/students/loan-consolidation.shtml for
more information.
Check out these additional borrowing tips
Complete the FAFSA as early in the year as possible.
Exhaust all grant and scholarship options before considering a federal student loan.
If you do borrow, exhaust all your federal student loan options before considering non-federal alternative or private loans and avoid putting college expenses on a credit card.
Borrow only what you need to pay school expenses.
Use the same lender for all student loans.
Notify your lender of any changes in your address, school enrollment status or ability to repay.
Know your rights and responsibilities.
Keep copies of all loan correspondence.
Make your loan payments on time.
Don’t be afraid to ask questions.