Federal Loans To Pay For Your Online Degree

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PLUS Loans

Short for "Parent Loans for Undergraduate Students." Before July 1, 2006, these loans were only available to the parents of dependent students, but now the Graduate PLUS Loan is available to graduate and professional degree-seeking students who are enrolled at least half time.

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Stafford Loans

Federal loans that are available to students to fund undergraduate and graduate education costs. They can either be need-based (subsidized) or non-need based (unsubsidized.) You will pay a fee of up to 4% of the loan. Interest, for loans disbursed after July 1, 2006, is fixed at a rate of 6.8%.

• FFELP: Federal Family Loan Education Program wherein Stafford and PLUS loans are financed by a private lender, such as Sallie Mae, but backed by the federal government.
• Direct Lending: William D. Ford Federal Direct Loan Program, wherein Stafford and PLUS loans are available directly from the federal government, not through a commercial lender.

Typically, a college or university participates in the government's direct-loan plan or FFELP, but not both.

Federal Subsidized Stafford Loan (Need-Based)
• No interest charged while borrower is enrolled in school at least half-time, nor during grace or deferment periods
• Interest Rate: 6.8% fixed (for loans first disbursed after July 1, 2006)
• Fee: up to 4% of the loan (deducted proportionately from each loan disbursement.)
• Note: if you fail to make your scheduled loan payments, you may be charged collection costs and late fees.

Federal Unsubsidized Stafford Loan (Non-Need Based)
• Interest accrues any time; borrower responsible for paying the interest at all times.
• Interest Rate: 6.8% fixed (for loans first disbursed after July 1, 2006)
• Fee: up to 4% of the loan (deducted proportionately from each loan disbursement.)
• Note: if you fail to make your scheduled loan payments, you may be charged collection costs and late fees.

Remember! For help in choosing a lender, contact your school. The financial aid office may have a list of "preferred" lenders. However, keep in mind:

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Perkins Loans

Low-interest loans for "exceptionally" needy students funded by the federal government, and awarded by the school, that are repayable over a period up to 10 years, depending on amount owed. They can be used for undergraduate or graduate study and you do not have to be enrolled full-time to be eligible.

Perkins loans are similar to subsidized Stafford loans. The most notable differences are no associated fees to take out the loan and you enjoy a longer grace period.