Can An Independent Student Apply For A Plus Loan – Federal Direct Loans may or may not be subsidized. Both types of loans offer many benefits, including flexible repayment options, low interest rates, debt consolidation options, as well as forbearance and deferment programs.
The main difference is that subsidized loans are based on the financial needs of the borrower. Both student loans must be repaid including interest, but the government helps pay part of the interest on subsidized student loans.
Can An Independent Student Apply For A Plus Loan
The rising cost of a college degree means more students than ever are borrowing to cover their costs. While some students choose private student loans, more than 42.8 million borrowers have federal student loans. Learning about subsidized and unsubsidized federal loan options can help you prepare to pay for your college education.
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Federal direct student loans, subsidized or unsubsidized, are available to borrowers who meet the following criteria:
Direct Subsidized Loans are available only to graduate students who demonstrate financial need. Both undergraduate and graduate students can apply directly for unsubsidized loans and there are no financial requirements.
If you’re eligible for a subsidized loan, the government pays at least half of your loan interest while you’re in school and continues to make payments for a six-month grace period after you leave school. The government will also repay your loan during the grace period.
To apply for one type of loan, you must complete the Free Application for Federal Student Aid (FAFSA). This form asks for information about your and your parents’ income and assets. Your school uses the FAFSA to determine the types of loans you can get and how much you’re eligible to borrow.
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The Federal Direct Loan program has an annual maximum limit on the amount you can borrow through either a subsidized or unsubsidized loan. There is also a limit on total borrowing.
First-year undergraduate students can borrow a total of $5,500 in subsidized and unsubsidized loans if they are still dependent on their parents. Only $3,500 of this amount can be given as a subsidized loan. Independent students and dependent students whose parents do not qualify for a Direct PLUS Loan can borrow up to $9,500 for their first year of undergraduate education. Subsidized loans are also limited to $3,500 of this amount.
The loan limit increases for each subsequent year of enrollment. The total unsubsidized loan limit for dependent students is $31,000, the subsidized loan limit is $23,000. For independent students, the total increases to $57,500, with the same limit of $23,000 on subsidized loans.
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The total Direct Loan limit for graduate and professional students, including undergraduate loans, is $138,500, of which $65,500 can be subsidized. However, since 2012, graduate and professional students receive only unsubsidized loans.
Between 2013 and 2021, the United States Department of Education limited the number of years you can receive student loan aid to 150% of your published program length.
This meant that if you enrolled in a four-year degree, you could get a subsidized loan for up to six years. This rule was repealed effective July 1, 2021. Additionally, the revocation applied retroactively to the 2013–2014 award year. Any borrower who accrued interest above their subsidized student loan limit had their balance adjusted.
Federal loans are known to have the lowest interest rates, especially compared to private lenders that can charge double-digit annual percentage rates (APRs). From July 1, 2024 through June 30, 2025, federal student loan interest rates are 6.53% for undergraduate student loans and 8.08% for graduate student loans.
Federal Student Aid
One more thing worth noting about interest. The federal government pays the interest on Direct Subsidized Loans if you are enrolled in school for the first six months after leaving school and at least half during the grace period. This interest rate subsidy does not apply to student loans that have been put on hold. If you stop making payments or make smaller payments temporarily, interest will continue to accrue.
There are many options available to you when it comes time to start paying off your loan. You will automatically be enrolled in the standard repayment plan unless you ask your lender for a different option. This plan sets the repayment term up to 10 years with equal monthly payments.
In comparison, graduated payment plans start your payments low and then increase. The tenure of this plan is also up to 10 years, but due to the payment structure you will have to pay more than the standard option.
There are also some Income Driven Repayment (IDR) plans for students who need the flexibility to make monthly payments.
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This income-based plan sets your payment at 10% of your monthly income, which is recalculated annually. This program allows you to stretch out repayments for up to 20 or 25 years, whether you borrowed for an undergraduate or graduate program, and if you don’t repay within that period, any amount owed is cancelled.
The advantage of income-based plans is that they can lower your monthly payments. But the longer it takes to repay the loan, the more interest you will have to pay.
The good thing is that the student loan interest paid is tax deductible. You can deduct up to $2,500 in interest paid on an approved student loan, and you don’t have to itemize to get this deduction. Deductions reduce your taxable income for the year, which can lower your tax bill or increase the size of your refund. If you paid $600 or more in student loan interest per year, you will receive a Form 1098-E from your loan servicer to use for tax filing.
Subsidized and unsubsidized loans are provided by the federal government. These loans offer security and benefits that private student loans do not. For example, federal student loans may include plans for debt forgiveness or relief.
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Although you can refinance your federal student loans into private student loans, this may not be the best decision. It is important to first consider all of your options for repaying your federal student loans. After that, if you still want to refinance, you might want to look into the best student loan refinancing companies.
Both types of loans are provided by the federal government and must be repaid with interest. However, the government will make some interest payments on the subsidized loan.
There are many benefits of unsubsidized loans. They can be used for both undergraduate and graduate school, and students are not required to demonstrate financial need. Keep in mind that interest starts accruing as soon as you get the loan, but you don’t have to repay the loan until you graduate, and unlike private loans, there’s no credit check when you apply.
Subsidized loans offer many benefits if you qualify for them. The main benefit is that the government pays the interest on the subsidized portion of the loan while the student is in school and during a six-month grace period after graduation. However, subsidized loans are only available to graduate students who demonstrate financial need.
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You can pay off the subsidized loan at any time. Most students begin repaying their loans after graduation, and loan repayment is due six months after graduation. This six-month period is known as the grace period, during which the government pays the interest on the loan. When your loan is paid off, your loan servicer will put you on the standard repayment plan, but you can request a different payment plan at any time. In most cases, borrowers can make loan payments online through the loan servicer’s website.
Direct subsidized and unsubsidized loans can help pay for college. Remember, any type of loan must be paid back with interest at the end. Think carefully about how much you will need to borrow and which repayment option might work best for your budget.
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It is possible to get student loans without parental assistance, but it is important to understand the differences between federal student loans and private student loan programs.
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In general, students can almost always get federal student loans, but there are loan limits and you’ll usually have to enter your parents’ information on the Free Application for Federal Student Aid (FAFSA). There are some exceptions if you can prove your independence. For private student loans, you can borrow without a parent, but getting a student loan without a cosigner can be difficult.
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