Loan Types and Terms

Federal Direct Unsubsidized loans

  • Interest
    • For loans disbursed after July 1, 2016:
      • 5.31% fixed rate
      • Interest rates will be established each year for Direct Unsubsidized loans for disbursements that will occur between July 1 through June 30. Under the law, the index rate is determined each year as the “high yield of the 10-year Treasury note” plus a statutorily defined “add-on”. The interest rate for a loan, once established, will apply for the life of the loan – that is, the loan will be a fixed-rate loan. As a result, it is likely that students will have a set of fixed-rate loans, each with a different interest rate based on the year the loan was borrowed.
    • Interest accrues on Direct Unsubsidized loans immediately upon disbursement.
    • The Department of Education is no longer issuing Direct Subsidized Loans for graduate/professional level students with award years that began after July 1, 2012.
  • Fees
    • Direct Unsubsidized loans have a 1.069% origination fee so, for example, if you borrowed $10,000 your disbursement would be $10,000 - ($10,000 x .01069) or $9,893. You would still be responsible to repay $10,000 plus the interest associated with the $10,000 you borrowed.
  • Disbursements
    • Disbursements must be made in 2 equal payments over the length of the academic year. Borrowers should expect to receive one-half of loan proceeds at the start of the fall term and the second half at the start of the spring term.
  • Repayment
    • Begins after a 6-month grace period from when you cease at least half-time enrollment.
    • Standard repayment length is 10 years from date first payment is due; can be extended for some borrowers to 25 years. The Department of Education lists the various repayment plans on its website.
  • Eligibility
    • The financial aid office determines eligibility for the Direct Unsubsidized loan based on the FAFSA and the annual Cost of Attendance of the academic program. There are annual and aggregate limits for Direct Unsubsidized loans.

Federal Direct Graduate PLUS loans

  • Interest:
    • Loans disbursed after July 1, 2016:
    • Fixed interest rate of 6.31%
    • Interest rates will be established each year for Direct Graduate PLUS loans for disbursements that will occur between July 1 through June 30. Under the law, the index rate is determined each year as the “high yield of the 10-year Treasury note” plus a statutorily defined “add-on”. The interest rate for a loan, once established, will apply for the life of the loan – that is, the loan will be a fixed-rate loan. As a result, it is likely that students will have a set of fixed-rate loans, each with a different interest rate based on the year the loan was borrowed.
  • Fees
    • Direct Graduate PLUS loans have a 4.276% origination fee subtracted from the disbursement of loan proceeds. So, for example, if you borrowed $10,000 your disbursement would be $10,000 - ($10,000 x .04276) or $9,572. You would still be responsible to repay $10,000 plus the interest associated with the $10,000 you borrowed.
  • Eligibility
    • There is a credit check associated with the Direct Graduate PLUS Loan. To qualify, borrowers must not have an adverse credit history which for the Direct Graduate PLUS loan is defined as: 90 or more days delinquent on any debt or if, within 5 years of the date of the credit report, you have been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Federal Student Aid debt (for example, a Direct Loan or Federal Stafford Loan). The annual Direct Graduate PLUS limit is the difference between the student's annual cost of attendance less all other annual financial assistance. There is no aggregate Direct Graduate PLUS limit.
  • Disbursements
    • Disbursements must be made in 2 equal payments over the length of the academic year. Borrowers should expect to receive one-half of loan proceeds at the start of the fall term and the second half at the start of the spring term.
  • Repayment
    • Begins after a 6-month grace period from when you cease at least half-time enrollment.
    • Standard repayment length is 10 years from date first payment is due; can be extended for some borrowers to 25 years. The Department of Education lists the various repayment plans on its website.

Federal Perkins Loans (No longer available)
Important changes to Perkins loan terms, effective March, 2010

  • Interest:
    • Fixed rate of 5%
  • Fees:
    • None
  • Eligibility:
    • The financial aid office determines eligibility based on your Expected Family Contribution (EFC) from the FAFSA and your annual Cost of Attendance. There are annual and aggregate limits for Perkins loans. Disbursements must be made in 2 equal payments over the length of the academic year. Borrowers should expect to receive one-half of loan proceeds at the start of the fall term and the second half at the start of the spring term.
  • Repayment
    • Begins after a 9-month grace period from when you cease at least half-time enrollment.
    • Repayment can be postponed during residency with deferment or forbearance for borrowers who qualify
    • A second 6-month grace period is available following an Economic Hardship Deferment
    • Repayment length is 10 years from date first payment is due

Alternative/Private loans

Alternative/Private loan lenders use different types of financing components to determine what your interest rate will be. They may lack the deferment and forbearance options for residency that many federal loan programs offer. These loans may charge fees. Most Alternative/Private Loans have no interest rate cap, so these loans may tend to be more expensive than the Graduate PLUS loans in the long term. Alternative/private loans are not eligible to be considered part of the borrower's total educational debt in calculating eligibility for the Economic Hardship Deferment.

To make an informed decision, it is helpful to know historical trends of those rates, so we have included the links to Forecasts and Bankrates below.

Bankrate.com: for Prime and LIBOR interest rate indexes
Financial Forecast Center: for forecasts of future interest rates