Financial Aid Options — Loans

A student loan is money you borrow from the Federal government or from your school to finance your education. Students in Utah can borrow under three Federal loan programs: the Federal Perkins Loan (if your school participates in this program), the Federal Subsidized Stafford Loan, and the Federal Unsubsidized Stafford Loan. Parents of undergraduate students can also borrow under the Federal PLUS loan program. 

You may be wondering how much you should borrow to pay for college. Financing a college education can be very challenging. Because loans need to be paid back with interest, they should be a last resort. Other sources of financing include part-time or summer work, savings, assistance from parents or relatives, grants, and scholarships.

Scholarships and grants are awarded directly to students by numerous organizations and companies. While not easy to get, scholarships and grants need not be repaid, so it is worth checking with your employer or your parents' employer to see if there is a scholarship you might qualify for. If you approach your college or university's financial aid office to apply for a loan, they will automatically consider your eligibility for a grant offered through either the federal or state government before it determines your eligibility for a loan.

Federal Stafford Loan
This is a loan that you borrow from a bank or credit union which is insured by the federal government. Subsidized Stafford Loans first disbursed on or after July 1, 2008 have a fixed rate of 6.0%. Unsubsidized Stafford loans will have a fixed interest rate of 6.8%. In addition the federal government deducts an origination and insurance fees proportionally from every disbursement of your loan, see UHEAA's Borrower Benefits. UHEAA will pay the 1% guaranty fee for Utah students who borrow from a lender that participates in the Utah State Board of Regents Loan Purchase Program. (For a list of those lenders, click here).

Stafford loans have a six month grace period after you drop below half-time, or leave school, or graduate before you must start making payments. You do not need to make payments during this period; but if you have an unsubsidized loan, you will be responsible for the interest on the loan, while you are in school and during the grace period. The maximum amount most students can borrow each year is summarized below.

*The graduate debt limit includes loans received for undergraduate study.

Note: These federal maximums will probably exceed the amount you can borrow at most Utah schools. You cannot borrow more than the total estimated cost of education minus any other aid you receive.

Federal Graduate/Professional PLUS Loan
Graduate students with favorable credit ratings are eligible to borrow up to the school's total estimated cost of attendance (minus any other aid received, including grants, scholarships, veterans benefits, other student loans, etc.). These loans are not subsidized by the federal government and carry a fixed interest rate of 8.5%. Borrowers must begin repaying a Graduate PLUS loan 60 days after the last disbursement of a given year.

Parent Loans to Undergraduate Students (PLUS)
Parents of dependent undergraduate students with favorable credit ratings are eligible to borrow up to the school's total estimated cost of attendance (minus any other aid received, including grants, scholarships, veterans benefits, other student loans, etc.). These loans are not subsidized by the federal government and carry a fixed interest rate of 8.5%. Parents are required to begin repaying a PLUS loan 60 days after the last disbursement of a given year.

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