After the Pell Grant eligibility is established, eligibility for the various student loan programs offered by the federal government can be determined. The most widely utilized student loan is the former Guaranteed Student Loan, now called the Federal Direct Student Loan . These loans may be either subsidized or unsubsidized, based upon financial need and dependency status. Loans are made directly from the U.S. Department of Education, and funds are credited to the student's account. Interest rates are variable, with a maximum rate of 8.25 percent.
Payments begin six months after the student drops below half-time status.
There are various repayment options available from the Department of Education, including the Standard Repayment Plan, the Graduated Repayment Plan, the Extended Repayment Plan and the Income Contingent Repayment Plan. Parents are also eligible to apply for a low-interest loan to assist with educational expenses for a dependent child. This is a non-need based program, so every parent is eligible to apply. Normal standards of credit worthiness are used to determine if a parent is accepted for the loan. Interest rates are variable, with a maximum rate of 9 percent.