Explore your loan options
A loan is money you borrow and must repay, usually with interest. If you applied for financial aid to attend VSU, loans may be included in your financial aid offer.
Be sure to understand the terms of a loan before you sign anything. The terms include how many months or years it will take to pay back the loan, the interest rate you’ll be charged, and how much interest you will pay back over the length of the loan when making minimum payments only.
Student loans can be issued by both the federal government and private lenders. However, keep in mind that federal student loans offered by the U.S. Government usually have lower interest rates and more repayment options than loans from a private lender, such as your bank.
The federal government offers three types of Direct Loans to students through the William D. Ford Federal Direct Loan Program. These are called Direct Loans because students borrow money directly from the U.S. Government. The three types of Direct Loans are: Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, and Federal Direct PLUS Loans.
The Federal Perkins Loan Program is a federal school-based program for undergraduates and graduate students who have exceptional financial need. For this type of loan, the school is the lender.
Below are more details about each of the loans mentioned:
Federal Direct Stafford Subsidized Loans
These are subsidized loans. This means that the federal government will pay the interest on the loan while the student is in school and during specified deferments. The student must demonstrate financial need to receive the loan. The interest rate is specified in the disclosure statement when a loan is disbursed. An undergraduate student may borrow a maximum of $3,500 for the first year, $4,500 for the second year, and $5,500 for the junior and senior years of undergraduate study.
Federal Direct Unsubsidized Stafford Loans
Students may receive these unsubsidized loans regardless of need, but will have to pay all interest charges. If you allow the interest to accumulate, it will be capitalized which means the interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount.
Federal Direct PLUS Loans
The PLUS Loan is a non-need-based educational loan program that allows parents to borrow funds for full-time dependent students. Parents may borrow up to the cost of education less any other financial assistance received during the loan period. Repayment begins within 60 days after the loan is fully disbursed. Parents may defer the loan if the student is enrolled at least half-time. The repayment period can be extended up to 10 years with minimum monthly payments to be arranged with the lender.
For more information, refer to the Federal Direct PLUS Loan FAQ.
Federal Perkins Loan formerly NDSL
The Perkins is a long-term, low-interest loan program based on student need. Students may borrow up to a total of $1,500 per academic award year. Students accepting Perkins assistance should be aware of their repayment responsibilities. Repayment of principal begins nine months after the student graduates or leaves school for other reasons.
Click here to learn more about federal student loans.
Private Student Loans
Private student loans can help to pay college expenses when students are not eligible for financial aid or are unable to obtain a federal student loan.
Borrowing money for college from a private lender is much like borrowing money for anything else, such as an automobile. You will need to qualify for the loan based on your income and credit history. If you don’t have income or an established credit history, you will probably need someone to co-sign the loan for you. This could be a parent, for example.
Keep in mind that private loans are subject to higher interest rates, and that none of the interest is subsidized (paid) by the federal government. Therefore, it is wise for students to explore other lower-cost options before taking out a private loan.
If a private loan is your only option, be sure to compare the loan terms, such as interest rates and length of repayment, from various lenders so you can get the best loan arrangement possible.
Note: All first-time federal student loan recipients are required to participate in an entrance interview session. And prior to graduation or withdrawal, each student must also attend an exit interview to make arrangements for repayment of his or her outstanding loan.