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Minnesota 2nd District
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Education Assistance
Federal Higher Education Loans
There are many ways for families and students to receive financial aid. The Federal government is the largest source of financial aid, and awards student aid through grants, loans, work-study and military opportunities. Other avenues for financial aid come from State sponsored programs, such as the Minnesota State Grant Program, the private sector and from institutions themselves. Combining these sources can help many students attain post secondary education.
Stafford Loans
The Federal Government offers three different types of loans which are part of a group called Federal Stafford Loans:
- Subsidized Loan: These are available to students who are in financial need. The Federal government pays the interest to the lender.
- Unsubsidized Loan: The student pays the interest while in school.
- Parent Loan for Undergraduate Students (PLUS): Loans to the families of dependent children who are enrolled in an undergraduate program.
Examples of Stafford Subsidized and Unsubsidized loan awards:
- First Year Undergraduates: Subsidized $ 2,625, Unsubsidized $ 6,625
- Second Year Undergraduates: Subsidized $3,500, Unsubsidized $7,500
- Third Year & Beyond: Subsidized $5,500, Unsubsidized $10,500
- Graduate/Professional Students: Subsidized $8,500, Unsubsidized $18,500
- Undergraduate Aggregate Total: Subsidized $23,000, Unsubsidized$46,000
Data from Minnesota Higher Education Services
Loan Requirements
You can qualify for a Stafford loan if you are attending school at least part time and demonstrate financial need. To apply for Stafford loans, contact the institution that you are attending or wish to attend.
The amount of money a student can receive is based on their dependent or independent status (self supporting) and financial need. The interest rates for these loans vary from year to year.
Subsidized vs. Unsubsidized
For subsidized loans the Federal government pays the interest on the loans until the repayment date is set. This date is usually about 6 months after completion of degree or when the student drops below part time status. This date is set when the loan is obtained.
Unsubsidized loans are for students who do not qualify for subsidized loans because they have not demonstrated financial need.
Loan Interest Rates
Federal Stafford and Direct Loans have an interest rate of 6.92 % after attending school during repayment. The interest rate is 6.32% for an unsubsidized loan while the student is in school.
Other Federal Loans
Another Federal Loan for students is called the Federal Perkins Loan. This is a low interest, 5% loan, and is available to students on a financial need basis. This loan is applied for in the same way as the Stafford loan.
Benefits: Undergraduates can borrow up to $4,000 a year and $20,000 total. Graduate students can borrow up to $6,000 a year and $40,000 total.
All or part of this loan can be deferred if the recipient goes on to teach handicapped children or teaches in a low income elementary or secondary school
Direct Loans
These loans have the same benefits that non-direct Stafford loans have, but the Federal government funds the loan instead of a private funding institution. A direct loan is applied for through the same process as a non-direct Stafford loan.
Parent Loans
This loan is open to the families of dependent students, and is not based on financial need. The loan has an interest rate of 7.72% and is subject to change. Repayment of this loan occurs 60 days after student leaves the institution. The Application process for this loan is the form as the Stafford Loan.
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