Understanding Loans
Educational loans are often a necessary and, at times, a desirable way to help finance a college education. In addition to using family savings, scholarships, grants and student employment, many families may still need or want to take out loans as part of their college financing plan. Educational loans can be obtained through the federal government or through private sources—or a combination of both. There are various types of loans for families seeking assistance in funding the family contribution toward college costs and for students for whom loans are part of the financial need-based package.
GW participates in several federal low-interest loan programs. Below are the various types of loans for families to consider. Some are need-based; others are not. Once students are admitted to GW, more detailed information will be provided about these various loan options.
Federal Perkins Loan Program
The Federal Perkins Loan is awarded to students who demonstrate need. Award amounts depend upon the demonstrated need of the student and funding levels. To be considered for this loan, students must apply for financial assistance by the stated deadlines. If eligible, the financial aid award from GW will include this loan, and GW will be the lender. This loan has an interest rate of 5 percent, which begins to accrue nine months after graduation or when the student drops below half-time status. Repayment generally starts three months later and may continue for up to 10 years, excluding periods of deferment.
Federal Direct Stafford Loan Program
The Federal Direct Stafford Loans are funded by the U.S. Department of Education. To receive a Federal Direct Stafford Loan—whether subsidized or unsubsidized—applicants for admission to GW must submit a completed FAFSA. The financial aid award may include one or both of the following Direct Stafford Loans.
- Subsidized Federal Direct Stafford Loans: Offered to students with financial need. Under this loan, interest is paid by the federal government, and no payment is required from the student while enrolled at least half-time. Loan payment begins six months after the student graduates or leaves the University.
- Unsubsidized Federal Direct Stafford Loans: Interest begins accruing on the date the loan is received. Applicants may choose to pay the interest only or allow it to accumulate and capitalize (added to the principal amount of the loan) until six months after graduating or leaving GW.
Direct Stafford Loan amounts increase each year as the student successfully matriculates. The interest rate on the Federal Direct Stafford Loan is a fixed rate. The current interest rate is 4.5 percent for subsidized loans and 6.8 percent for unsubsidized loans.
|
Grade Level |
Maximum Subsidized |
Maximum Unsubsidized |
Total |
|
Freshmen |
$3,500 |
$2,000 |
$5,500 |
|
Sophomore |
$4,500 |
$2,000 |
$6,500 |
|
Junior |
$5,500 |
$2,000 |
$7,500 |
|
Senior |
$5,500 |
$2,000 |
$7,500 |
An additional amount in Unsubsidized Direct Stafford Loan funding is made available to an independent undergraduate student or dependent student whose parent is ineligible for a Direct PLUS loan. Those limits are as follows.
|
Grade Level |
Maximum Subsidized |
Maximum Unsubsidized |
Total |
|
Freshmen |
$3,500 |
$6,000 |
$9,500 |
|
Sophomore |
$4,500 |
$6,000 |
$10,500 |
|
Junior |
$5,500 |
$7,000 |
$12,500 |
|
Senior |
$5,500 |
$7,000 |
$12,500 |
Federal Direct Parent Loan for Undergraduate Students
Federal Direct Parent Loan for Undergraduate Students (PLUS) loans funded by the U.S. Department of Education are available to credit-worthy parents. With a Direct PLUS loan, parents may borrow up to the full cost of a student's education, including tuition, room and board, books and supplies, transportation and living expenses, less any other financial aid. There are no maximum or minimum income guidelines for eligibility for the loan. Additional advantages include a 7.9 percent fixed interest rate. Interest may be tax deductible.
Private Alternative Loan Options
Private alternative loans are non-federal, private credit-based loan products offered by various lending institutions. The loans generally require school certification of enrollment and eligibility information and are issued in the student's name. They can be used like a Federal Direct PLUS loan to borrow up to the cost of attendance less any financial aid. We encourage students to exhaust all federal loans described on this page before considering private loans.
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