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What types of federal loans are available? Baker College offers loans through the William D. Ford Federal Direct Loan Program. Under this program, the U.S. Department of Education (DOE) is the lender. There are four types of federal loans available:
- Federal Direct Subsidized Loan. Available to undergraduate students who demonstrate financial need. DOE pays the interest while the student is in school at least half-time, during the grace period (usually six months), and during deferments (postponements of repayment).
- Federal Direct Unsubsidized Loan. Available to undergraduate and graduate students, with no requirement to demonstrate financial need. The student is responsible for paying the interest while in school, during the grace period or in deferment. The payment of interest may be deferred while the student is in school but will accrue on the loan.
- Federal Parent PLUS Loan for Undergraduate Students. Available to the parent of a dependent undergraduate student enrolled at least half-time. The loan is a non-need-based loan for parents without an adverse credit history who want to borrow for their dependent students educational expenses. Parents can borrow up to the student’s cost of education minus other financial assistance.
- Federal Graduate PLUS Loan for Graduate Students. Available to students enrolled at least half-time in a graduate level program. Grad PLUS loans are a non-need-based loan for students without an adverse credit history. Students may borrow up to the cost of attendance minus other financial assistance.
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Why should I take out federal student loans? Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it. Federal student loans offer many benefits compared to other options you may consider when paying for college:
- The interest rate on federal student loans is fixed and usually lower than that on private loans — and much lower than that on a credit card!
- You don’t need a credit check or a cosigner to get most federal student loans.
- You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.
- If you demonstrate financial need, the government pays the interest on some loan types while you are in school and during some periods after school.
- Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.
- If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.
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How much money can I borrow in federal student loans? The maximum amount of subsidized and unsubsidized loans you can borrow is based on your dependency status and grade level. Whether you are considered dependent or independent, is based on your age, marital status and other factors. All graduate/professional degree students are considered independent.
The actual loan amounts and types of loans (subsidized, unsubsidized or a combination of both) that you are eligible to receive each year are determined by the school. Your eligibility is based on such factors as the cost of attendance, expected family contribution, other financial aid and the length of your program. The actual amounts you are eligible to borrow may be less than the maximum amounts shown below.
Table 1: Maximum loan eligibility based on grade level in college.
| Grade Level |
Dependent Undergraduate Students (1) |
Independent Undergraduate Students |
Graduate and Professional Degree Students |
| First Year |
$5,500 (max $3,500 subsidized) |
$9,500 (max $3,500 subsidized) |
$20,500 |
| Second Year |
$6,500 (max $4,500 subsidized) |
$10,500 (max $4,500 subsidized) |
$20,500 |
| Third Year and Beyond |
$7,500 (max $5,500 subsidized) |
$12,500 (max $5,500 subsidized) |
$20,500 |
| Aggregate Maximum Loan Amounts |
$31,000 (max $23,000 subsidized) (2) |
$57,500 (max $23,000 subsidized) (3) |
$138,500 (4) |
- Dependent students whose parents are unable to get PLUS Loans are eligible to receive the independent undergraduate loan limits.
- Excludes dependent students whose parents are unable to borrow a PLUS Loan.
- Includes dependent undergraduates whose parents are unable to borrow a PLUS Loan.
- The graduate/professional degree student maximum includes Stafford Loans received for undergraduate study.
Table 2: Direct loan interest rates.
| Direct Loan Interest Rates |
| Loan Type |
Borrower Type |
Fixed Rate for loans first disbursed on or after July 1, 2023 and before July 1, 2024 |
Fixed Rate for loans first disbursed on or after July 1, 2024 and before July 1, 2025 |
| Federal Direct Subsidized and Unsubsidized |
Undergraduate |
5.50% |
6.53% |
| Federal Direct Unsubsidized |
Graduate or Professional |
7.05% |
8.08% |
| Federal Direct PLUS |
Parents of Undergraduate or Graduate/Professional |
8.05% |
9.08% |
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Do federal loans have fees? In addition to interest, there are loan origination fees. This fee is based on a percentage of the loan principal, and is deducted before you receive any loan money. This means the money you receive will be less than the amount you actually borrow. You are responsible for repaying the entire amount you borrowed and not just the amount you received.
Table 3: Loan origination fees.
| Loan Origination Fees |
| Loan Type |
First Disbursement Date |
Loan Fee |
| Federal Direct Subsidized Unsubsidized Loan |
Loans first disbursed on or after October 1, 2020 and before October 1, 2025. |
1.057% |
| Federal Direct PLUS Loan |
Loans first disbursed on or after October 1, 2020 and before October 1, 2025. |
4.228% |
Review additional information about the Federal Direct Loan Program at studentaid.gov.
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