Federal Student Loans

Federal Student Loans offer the best interest rates and terms for college loans. Most college students will need some type of student loan, so you will want to look at these guaranteed federal government loans as part of your financial aid package.

Student loan interest rates vary each year based upon the 10 year treasury note, but there are caps on the rate.

Federal Student Loans

The US Direct Federal Student Loan program offers federal loans that can be used at most accredited colleges, including online and for-profit schools. The interest rates are lower than most other student loans, you get a grace period before repayment is required, and there are options to defer, or consolidate loans after graduation.

These loans were previously knows as Stafford Loans, so sometimes you will hear that same term used to describe federal student financial aid.

For information on loans offered to parents of independent students, see Federal Plus Loan.

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Federal Student Loans

Federal Student Loans are federal student loans for university and college students. These loans are intended to supplement college savings, family contribution, scholarships, grants and work-study. Nearly all students are eligible to receive student loans, and they do not depend upon your credit rating.

Federal student loans help you establish credit history, so even if you don't need to take out a student loan, you may want to as a way to establish credit.

Federal student loans for undergraduates may be subsidized by the U.S. government for low-income students with demonstrated need based upon their FAFSA federal student loan application, or unsubsidized student loan.

Currently, the rate for the student loans will vary each year based upon the 10 year treasury note interest rate in the June auction. They will be capped. In addition, a loan origination fee of around 1% may apply.

2024 - 2025 School Year

Type	Subsidized or Unsubsidized	Interest Rate
Undergraduate Student Borrowers	Both	6.53%
Graduate or Professional Student Borrowers	Unsubsidized	8.08%
Parent Plus Loan	Unsubsidized	9.08%

2023 - 2024 School Year

Type	Subsidized or Unsubsidized	Interest Rate
Undergraduate Student Borrowers	Both	5.50%
Graduate or Professional Student Borrowers	Unsubsidized	7.05%
Parent Plus Loan	Unsubsidized	8.05%

2022 - 2023 School Year

Type	Subsidized or Unsubsidized	Interest Rate
Undergraduate Student Borrowers	Both	4.99%
Graduate or Professional Student Borrowers	Unsubsidized	6.54%
Parent Plus Loan	Unsubsidized	7.54%

2021 - 2022 School Year

Type	Subsidized or Unsubsidized	Interest Rate
Undergraduate Student Borrowers	Both	3.73%
Graduate or Professional Student Borrowers	Unsubsidized	5.28%
Parent Plus Loan	Unsubsidized	6.28%

2020 - 2021 School Year

Type	Subsidized or Unsubsidized	Interest Rate
Undergraduate Student Borrowers	Both	2.75%
Graduate or Professional Student Borrowers	Unsubsidized	4.30%
Parent Plus Loan	Unsubsidized	5.30%

2019 - 2020 School Year

Type	Subsidized or Unsubsidized	Interest Rate
Undergraduate Student Borrowers	Both	4.53%
Graduate or Professional Student Borrowers	Unsubsidized	6.08%
Parent Plus Loan	Unsubsidized	7.08%

2018 - 2019 School Year

Type	Subsidized or Unsubsidized	Interest Rate
Undergraduate Student Borrowers	Both	5.05%
Graduate or Professional Student Borrowers	Unsubsidized	6.60%
Parent Plus Loan	Unsubsidized	7.60%

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Federal Government Student Loans Maximum Limit

With subsidized student federal government student loans, the U.S. government pays the interest while you are in school. The rates are listed above on this page, and vary each year for both undergraduate student loans and graduate students loans (unsubsidized only). These are awarded based upon financial need. About 2/3 of federal student loans go to students with family Adjusted Gross Income (AGI) under $50,000. A high income does not necessarily exclude you, as ~10% go to students with family AGI over $100,000.

Unsubsidized federal student loans are federally guaranteed loans are not based on financial need. Interest accrues when the loan funds are disbursed to the school. The unsubsidized student loan rate for undergraduate students and graduate students varies each year and is listed above.

Payments on an unsubsidized Stafford loan are due to start six months after graduation, or six months after you drop below half-time status.

Maximum loan amounts depend on year of school, and if you are a Dependent Students (dependent upon parents for support) or Independent Student (self-supporting). This is not the same as being dependent on a tax return, so to find out if you are considered a dependent or independent student for financial aid purposes, see Dependent or Independent Student

Maximum Limit Federal Student Loans

Year	Dependent Students*	Independent Students*
Year 1 Undergraduate Annual Loan Maximum	$5,500, but no more than $3,500 of this as subsidized loans	$9,500, but no more than $3,500 of this as subsidized loans
Year 2 Undergraduate Annual Loan Maximum	$6,500, but no more than $4,500 of this as subsidized loans	$10,500, but no more than $4,500 of this as subsidized loans
Year 3 and Beyond Undergraduate Annual Loan Maximum	$7,500, but no more than $5,500 of this as subsidized loans	$12,500, but no more than $5,500 of this as subsidized loans
Graduate or Professional Student Annual Loan Maximum	Not applicable – considered independent student	$20,500, unsubsidized only
Undergraduate Students - Total Aggregate Limit	$31,000, but no more than $23,000 of this as subsidized loans	$57,500, but no more than $23,000 of this as subsidized loans
Graduate or Professional Students - Total Aggregate Limit	$31,000, but no more than $23,000 of this as subsidized loans	$138,500, but no more than $65,500 of this as subsidized loans. Note: The graduate student aggregate limit includes all federal loans received for undergraduate study

*Note:if the parent of an undergraduate dependent student is unable to obtain Parent Plus loan, that student is eligible for greater loan amounts, as listed under the independent student column.

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Federal Perkins Student Loans

Perkins student loans were federal student college loans for low-income students. Usually these loans were made to students who demonstrate financial need, and who are also awarded Pell Grants. However, it was possible to receive a Federal Perkins Loan without a Pell Grant.

This program ended on September 30, 2017. Prior recipients have 10 years to repay the loans at 5% interest rate.

A Perkins student loan was a type of student college loan made to students with exceptional financial need, based upon the student's FAFSA financial aid application. Funds were provided by the federal government for these loans. The interest rate for Perkins loans is 5%, and payments begin 9 months after you graduate or leave college.

How much money could you get? Undergraduates could receive a maximum of $5000 per year, with a limit of $27,500 overall. Graduate students could receive up to $8,000 per year to a maximum of $60,000 in federal Perkins loans.

Unlike Pell Grants, a Perkins student loan must be repaid. Payment terms vary up to 10 years, and some Perkin loans may qualify for deferment or loan forgiveness.

Perkins Student Loan Application and Eligibility

In general, to qualify for a Perkins loan, you had to meet the Pell Grant Requirements. The application was the same as the FAFSA Application. Each college or university determined who would receive the Perkins student loans, and how large of an award would be given. 

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Advice from our readers about student loans

Here is some advice from some of our readers:

Only Take What You Need

Holly, Minnesota USA

When I began my college career I was unsure of the unknown expenses there might be. When I received my Financial Aid Award letter I took the extra money that wasn't need to pay for school and opened a savings account. I kept the extra money as a cushion in case I needed it for an expense I had not foreseen. I promised myself I would never use the money in this account for anything except school expenses. I know of many students who use this money to go on vacation for spring break, to go shopping, etc. Once I completed my first year I took the money in my savings and paid it back so that my borrowed amount was reduced. I followed the same rule throughout my college career and it has reduced my student loans by several thousand dollars.

Paying Student Loans

Jeanine, Nevada USA

In a nutshell, the advice I would give to not be overwhelmed by paying student loans would be: 1) Borrow the minimum you need to get through school. 2) Work during school. 3) Live as cheaply as possible. 4) Pay student loans while they are in deferment if possible. 5) Pay off the highest interest loans first. 6) Consolidate student loans so only one monthly payment needs to be made. 7) Try to pay a little bit extra towards the principal.

Subsidized and Unsubsidized Loans

Kristen, California USA

Attention: High school Seniors! Make sure you know the difference between Subsidized and Unsubsidized loans ! Subsidized loans are loans that will not accumulate interest during your college career.

Unsubsidized loans are loans that will accumulate interest every time you accept it per year. The best loan is SUBSIDIZED!

The government will also offer you the Parent Plus loan, Do not take it!, it is going to bind your parents in the loan, so if you cannot pay it off, Uncle Sam will come after your parents, it will accumulate interest just like the unsubsidized loan.

Do not be fooled with the idea of no accumulated interest... the subsidized loan will still have interest after the 6 month grace period given right after you graduate college. Fortunately, the amount at that later date won’t be as bad as the accumulated amount with the other two loans mentioned above.

For additional advice from other students, see Paying off Student Loans

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Student Loans

Student Loan Overview

Federal Student Loans

Dependent or Independent Student

Federal Plus Loan

Consolidating Student Loans

Student Loan Debt Forgiveness

Paying off Student Loans

Sallie Mae Student Loans

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