Taking out a loan may seem a bit scary, but if you are responsible and prepared, loans can be great options when you are in need. A loan is a borrowed sum of money that must be paid back, usually with interest. When you graduate, fall below half-time, or withdraw from school, a grace period begins. A grace period is a certain length of time, depending on what kind of loan you take out, that you have free before you must start repaying your federal student loans. Interest may be gathering on your loan during your grace period, depending on which type you have. Usually, grace periods tend to last about 6-9 months, but always make sure to check with your provider as the length of time may vary. Before leaving school, you should begin to devise a plan to pay off your loans. Although you are not required to make payments on your loan during the grace period, you can! It would be wise to check in with your lender(s) and servicer(s). The lender is the financial institution that provided your loans, and the servicer is who you will be making your payments to. If you are unsure of who your servicer is to make payments, you can log on to the National Student Loan Data System to find out.
There are numerous types of loans, and the differences between them can get a bit confusing. As a refresher, we will be going over the following;
- Stafford Loans (Subsidized vs Unsubsidized)
- Parent PLUS
- Grad PLUS
- Private Loans
- Emergency Short Term Loans
Stafford loans are also know as subsidized loans and unsubsidized loans, understanding the difference between the two is essential in making sure you take out the right loan for you. With a subsidized Stafford loan, the amount you are eligible for is based on need as determined by the FAFSA. With this loan, the federal government pays off the interest while you are enrolled in school and then also during your grace period. Unsubsidized Stafford loans build up interest while you are enrolled in school, and you are responsible for paying it. They are offered regardless of need or income.
Parent PLUS Loans
This loan is disbursed through the federal government and allows parents or stepparents of dependent undergraduate students to borrow money in order to put towards their students education. In order to meet the requirements, the student must be considered dependent, have a completed FAFSA on file, the parent must meet credit eligibility requirements, and the student must be enrolled in at least half time. For step by step information on how to complete the Parent PLUS loan, visit https://financialaid.wsu.edu/parent-loans/.
Grad PLUS Loans
This loan is not based on the income or any other information you provided on the FAFSA. With the Grad PLUS loan, graduate students attending graduate school or professional school are able to take out a loan up to the total cost of attendance for their institution. To be considered eligible, you must complete the FAFSA, meet credit requirements, complete loan counseling, and be enrolled in at least half-time. For more information on the Grad PLUS loan, visit https://financialaid.wsu.edu/graduate-professional-loans/.
Private loans are offered through banks and lending institutions among various other sources. The terms and conditions vary for each different private loan, so it is essential that you do your research beforehand. It is also important to note that the loan period must match the WSU regular academic term periods in order to be applied. For more information on private loans and where to search for them, visit https://financialaid.wsu.edu/private-education-loans/.
Emergency Short Term Loans
The Short-Term Loan program, also known as STL, is funded by WSU funds. Different schools may have similar programs as well. The amounts available depend on payments and interest that has been completed by previous borrowers. The STL is intended for emergency situations only because the terms and conditions are very different from other loan types. For WSU, STLs are not eligible to be applied to academic expenses such as tuition or other mandatory fees. Instead, they are to be used for immediate need, such as paying rent. For more information on eligibility, repayment, and how to apply, visit https://financialaid.wsu.edu/student-loans/.
Undergraduate Loan Amounts and Limits
|Type of loan||Freshman Annual Limit||Sophomore Annual Limit||Junior Annual Limit||Senior Annual Limit||Lifetime Limit|
|Subsidized loan: dependent student||$3,500||$4,500||$5,500||$5,500||$23,000|
|Subsidized loan: independent student||$3,500||$4,500||$5,500||$5,500||$23,000|
|Unsubsidized loan: Dependent student||$2,000||$2,000||$2,000||$2,000||$8,000|
|Unsubsidized loan: Independent student||$6,000||$6,000||$7,000||$7,000||$34,500|
|Direct PLUS Parent Loan||The loan amount varies widely. It should not exceed the total cost of assistance including other types of assistance. This loan requires good credit.|
|Private / Alternative Loans||The loan amount varies, but can not exceed the total cost of assistance including other types of assistance. This loan requires good credit.|
|See current student loan interest rates|
Graduate and Professional Student Loan Amounts and Limits
|Type of loan||Annual Loan Limit||Lifetime aggregate limit|
|Unsubsidized Direct Loan for Graduate Students||$20,500||$138,500|
|Unsubsidized direct student loan for medical students||$40,500||$224,000|
|Unsubsidized direct loan for Pharmacy students (9-month program)||$33,000||$224,000|
|Unsubsidized direct loan for Pharmacy students (12-month program)||$37,167||
|Unsubsidized direct loan for Veterinary students (9-month program)||$40,500||$224,000|
|Unsubsidized direct loan for Veterinary students (12-month program)||$47,167||$224,000|
|PLUS Loan for Graduate Students||Amounts vary widely. They should not exceed the total cost of attendance including other types of assistance. This loan requires good credit.|
|Loan for Health Professions||This loan is based on the EFC criteria, the FAFSA delivery date, and the current level of HPL funding. Amounts granted vary according to availability.|
|Private / Alternative Loans||Amounts vary widely. They should not exceed the total cost of attendance including other types of assistance. This loan requires good credit.|
|See current student loan interest rates|
Don’t worry, there are numerous loan re-payment options! Make sure to do your research to see if/what re-payment options are required for your loan. Below are brief descriptions of re-payment options, but it is important to do extensive research before selecting an option. Below is a link to a brief overview of different loan payment option.
Student loans primer
If you’re going to take out a loan to cover the costs of college, it’s important that you gain a good understanding of the different loan programs out there. The Washington State Department of Financial Institutions provides information about the different kind of loans and tips on how to shop around and get the best rates.