Types of Student Loans

FFELP or Direct Lending?

The first thing you need to know when understanding the types of federal student loans is that schools may participate in the Federal Family Education Loan Program (FFELP) or the William D. Ford Direct Loan Program - or both. If you attend a school participating in FFELP, you will have the right to choose your lender and your guarantor for the loan. In Missouri, the Missouri Department of Higher Education (MDHE) is the state-designated guarantor, and there are many benefits of choosing the MDHE for your FFELP loan guarantor.

Subsidized Federal Stafford Loan

• Eligibility is based on financial need.
• The federal government pays the interest while you are continuously enrolled in school at least half time, during your grace period, and during periods of authorized deferment.

Unsubsidized Federal Stafford Loan

• You may borrow up to the Cost of Attendance (COA) minus any other aid received, including any subsidized Stafford Loan amounts you may have been awarded.
• You are responsible for paying all interest, which will begin to accrue as soon as the loan is disbursed. You may choose to pay the interest as it accrues or defer it as long as you are enrolled at least half time, during your grace period, and during periods of authorized deferment.

Federal PLUS Loan

• A non-need-based loan available to graduate and professional students (for themselves) and to parents (for their dependent undergraduate student). You may borrow up to the Cost of Attendance (COA) minus any other aid received.
• You are responsible for paying all interest, which will begin to accrue as soon as the loan is disbursed.
• To be eligible, you must not have negative credit history.
• For graduate and professional student borrowers, the principal may be deferred as long as you are in school. For parent borrowers, the first payment is generally due within 60 days after the loan is fully disbursed. However, for loans first disbursed on or after July 1, 2008, parent borrowers may request to postpone payments while the student is enrolled at least half time.

Federal Perkins Loan

• The Perkins program is administered by your school's financial aid and/or business office and provides loan funds at a fixed 5% interest rate. (Note: Not all schools participate in this program. To find out if your school participates in the Federal Perkins Loan Program, contact your financial aid office.)
• Eligibility is based on financial need.
• Loans must be repaid to your school after you have completed the 9 month grace period.

Private or "alternative" Loan

• Eligibility requirements are determined by each private loan provider/lender.
• Alternative loans should be borrowed ONLY after you have exhausted all federal loan eligibility.
• Check with your school's financial aid office to determine if a private education loan is the best option for you.