The Federal Direct Loan
The Federal Direct Loan program is a federally-funded, self-help program offering a way to borrow money to pay for higher education. Also known as Stafford Loans, these loans are the most common of all federal loans. For these loans, the US Department of Education is the lender and delivers the loan funds directly to the school. Federal loans (including fees, interest rates, and limits) are dependent upon funding levels appropriated by the Federal Government and are subject to change.
At Illinois College, we will include these loans on your financial aid award letter if you are eligible to receive them. There are two types of Federal Direct Loans that may appear on your award:
- Federal Direct Subsidized Loan: This loan is awarded to students with financial need. Interest does not accrue on this loan until after graduation. (This is the most favorable type of loan).
- Federal Direct Unsubsidized Loan: This loan is award to students who do not have financial need or whose need has been met with other types of financial aid. Interest begins accruing on this loan immediately.
There are federal limits that specify how much loan eligibility students have each year based on the number of hours or credits the student has completed in college:
|
Class Standing (Hours Earned) |
Annual Federal Direct Loan Eligibility |
|
Freshman (0 - 26) |
$5,500 |
|
Sophomore (27 - 56) |
$6,500 |
|
Junior (57 - 87) |
$7,500 |
|
Senior (88+) |
$7,500 |
Comparison of Student Loans
|
Loan Name |
Interest Rate (7/1/24 - 6/30/25) |
Origination Fee (10/1/24 - 9/30/25) |
Repayment |
Co-signer or endorser needed? |
|
Subsidized Loan |
6.53% (no interest accrued while enrolled) |
1.057% |
Begins 6 months after graduation or enrolled less than half time |
No |
|
Unsubsidized Loan |
8.08% |
1.057% |
Begins 6 months after graduation or enrolled less than half time |
No |
|
Alternative Loans |
Varies |
Varies |
Varies - Some require immediate repayment |
Yes |
Direct PLUS Loans |
9.08% | 4.228% | Begins 6 months after graduation or enrolled less than half time | NO |