Educational loans are an investment in your future. You should not be afraid to take out educational loans, but you should be smart about it.  Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. You may not have to begin repaying your loans right away, but you don’t have to wait to understand your responsibilities as a borrower. Educational loans are available to undergraduate and graduate students as well as parents of undergraduate students.


This loan program is available to all students. Federal Direct Loans are low-interest loans from the U.S. Department of Education. It is the U.S. Department of Education’s major form of self-help financial aid and is available through the William D. Ford Federal Direct Stafford Loan Program. There are two types of Federal Direct Loans: subsidized and unsubsidized.

A Federal Direct subsidized loans is available to undergraduates with meet financial need after other resources are subtracted or to annual maximum loan limit, whichever is lower.  A subsidized loan is one in which the Federal government pays on the interest while the student is enrolled at least half time.

A Federal Direct unsubsidized loan is not based on your financial need. If your estimated Cost of Attendance (COA) is greater than your financial aid and you have not reached your annual maximum loan limit through the Federal Direct subsidized loan, you may qualify for Federal Direct unsubsidized loan. You are charged interest on this loan from the time the loan is disbursed until it is paid in full. You have the option to pay on the interest while in school, or to allow the interest to accumulate, which adds to the principal amount of the loan and increases the amount to be repaid.

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This program is available from the U.S. Department of Education to parents of undergraduate students and to graduate students, who need funding beyond Direct Loans. Applicants must be credit-worthy to qualify for this program. A PLUS borrower may receive a PLUS Loan up to the total Estimated Cost of Attendance (COA) less financial aid resources received by the student.

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Students needing additional funds or who may be ineligible for federal aid may want to apply for a private alternative loan.  You are encouraged to consider obtaining a private alternative loan only if you need funds above and beyond the maximum amount of Federal Direct Loans.  As well, you are encouraged to research various lenders as the application requirements, terms and interest rates can vary.  AB does not recommend any particular private alternative lender.  A good place to begin your search is