How does the education loan process work, what interest rates can I expect, and is there a moratorium period after course completion?
You apply through FAFSA for federal aid or with a private lender, then sign a promissory note before funds disburse. For the current year, federal undergraduate rates sit at 6.52 percent, graduate loans at 8.07 percent, and PLUS loans at 9.07 percent, with a 6 month grace period.
Your education loan journey follows a fairly standard path whether you go federal or private, and the numbers you actually pay depend heavily on which route you choose. For the current academic year, federal rates are fixed and public, while private rates swing widely based on your or your co-signer's credit profile.
Your Rates And Grace Period At A Glance
| Loan Type | Interest Rate | Grace Period |
|---|---|---|
| Federal undergraduate direct loans | 6.52 percent, fixed | 6 months, interest paid by government if subsidized |
| Federal graduate direct unsubsidized | 8.07 percent, fixed | 6 months, interest accrues and can capitalize |
| Federal Direct PLUS loans | 9.07 percent, fixed | 6 months, interest accrues throughout |
| Private loans | Roughly 2 to 17 percent, credit dependent | Varies, 6 to 9 months or immediate payments |
Your Step By Step Loan Process
- Submit FAFSA for federal aid or apply directly with a bank, credit union, or online lender for private financing.
- Review your financial aid offer from your school, then formally accept your loan amount through your student portal.
- Complete entrance counseling and sign your Master Promissory Note, after which funds disburse directly to your school with any remaining balance refunded to you.
My Advice
Max out subsidized federal loans before touching unsubsidized or PLUS loans, since the government covers your interest during school and your grace period only on subsidized amounts. If you go private, ask your lender the exact length of their grace period upfront, since some require payments to start while you are still enrolled.
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