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If the decision is made to take out a loan to help finance education, ISAC offers both student and parent loan programs under the Federal Family Education Loan Program (FFELP). As a reminder, some schools may participate in the Federal Direct Loan Program, under which the federal government acts as a lender instead of commercial lending institutions, as in FFELP. The terms and conditions for borrowing under both programs are very similar. The types of educational loans currently offered by lenders under the FFELP, or through the Federal Direct Loan Program, and defined in this section are:

Federal Subsidized Stafford Loan Program

Subsidized Stafford Loans are awarded to students who demonstrate financial need determined by filing the online Free Application for Federal Student Aid (FASFA). Because the U.S. Department of Education subsidizes the interest, borrowers are not charged interest while they are enrolled in school at least half time and during grace and deferment periods.

Federal Unsubsidized Stafford Loan Program

Unsubsidized Stafford Loans are awarded to students regardless of financial need. Borrowers are responsible for paying the interest that accrues during any period. Independent students and students whose parents cannot get a Federal PLUS Loan have higher unsubsidized loan limits. Students will be considered for a subsidized Stafford Loan before being considered for an unsubsidized Stafford Loan.

Federal PLUS Loans

Federal PLUS loans allow parents to borrow on behalf of their dependent undergraduate students, or graduate and professional students to borrow on their own behalf. All students must be enrolled on at least a half-time basis. As with unsubsidized Federal Stafford Loans, borrowers are responsible for the interest that accrues on the PLUS loans throughout the life of the loan.

Federal Perkins Loans

Federal Perkins Loans have a low interest rate and a longer grace period than the other educational loans, and allows borrowers up to $4,000 (undergraduate study) or $6,000 (graduate study) annually. This loan is available to undergraduate and graduate student who demonstrate exceptional financial need, and must be repaid to the school with the low interest rate of five percent.

Federal Consolidation Loans

Federal Consolidation Loans allow any borrower to combine one or more federal education loans into a new loan to facilitate repayment. The process of consolidating loans usually does not directly involve the school – the consolidating lender purchases qualifying student loans from other lenders and combines them into a single new loan.

Alternative (Private) Loans

Alternative or private loans are also available to students and parents. These loans are available to help families cover the Expected Family Contribution (EFC) calculated from the FAFSA.