Federal education loans consist of:
- Subsidized and Unsubsidized Federal Direct Loans
- Parent PLUS Loans
Subsidized Federal Direct Loan
Federally-subsidized student loan offered directly by the U.S. Department of Education. Interest and payments are deferred when you are enrolled at least half-time.
Unsubsidized Federal Direct Loan
Federal student loan incurs interest even while enrolled in school. Payments on the principal amount are deferred, but you are encouraged to pay the interest at least quarterly. If you don’t pay the interest, it is “capitalized” meaning that it is added to the original loan amount. You will be charged interest on the interest.
Current Legislation: The U.S. Department of Education has mandated a limit on the subsidized loan program. New student loan borrowers will not be able to request subsidized loan funds beyond 150% of the program of study. The U.S. Department of Education defines a new student loan borrower as a borrower who has never received a loan under the Federal Student Loan Program or has paid a prior Federal Student Loan in full.
Common Question: What is the difference between a subsidized and an unsubsidized loan? https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#subsidized-vs-unsubsidized
Parent PLUS Loan
If you’re a dependent student, your parents can request a federal Parent PLUS Loan to fill the gap between your financial aid and the Cost of Attendance. LeMoyne-Owen College offers the Federal Direct Parent PLUS loan through the U.S. Department of Education. Start the loan process here to request a Parent PLUS Loan: https://studentloans.gov/myDirectLoan/index.action
Payments on the principal loan amount may be deferred for as long as you are enrolled at least half-time. Your parent does need to pay the interest monthly or quarterly during your enrollment. A credit check is required for this loan. If your parent is denied credit, you may receive an additional unsubsidized loan if your parent will not use a cosigner/endorser on the loan. It is also possible for your parent to provide additional documentation to the Direct Loan Servicer to have the credit decision reconsidered.
Alternate Student Loans
Alternative (Private) student loans are provided by private lenders, such as banks. Before you take out a private loan, be sure that you have fully explored all federal funding options.
Private loans often require a credit check and may require a co-signer. Depending on the outcome of your credit check, these loans tend to be more expensive. Alternative student loans may be used to fill the gap between your federal aid and the Cost of Attendance.