Money is a necessity when it comes to higher education. The US government knows that, which is why they offer two different programs to help every student, regardless of their background, to complete their degree and move on to have a successful career. The two programs are the Perkins Loan Program and William D. Ford Direct Loan Program. The two programs differ in the borrower, lender and the standard application thresholds. Both loans have a max spending amount and the both allow parents and students to take out additional loans from other lenders.

William D. Ford Direct Loan Program

This program offers four different categories of loans. The first loan is a subsidized loan. These are available to undergraduates each year on a as-needed basis. The subsidized loans are given out based on the student’s year in school and their need. Loans range from $5,500 to $12,500. The loan is deferred without penalty for up to six months after the student graduates. The second type of loan is an unsubsidized loan. This type of loan is not needs-based, meaning students don’t have to prove they are struggling to be applicable for this loan. Undergraduates still have between $5,500 and $12,500 available to them, but graduate students have up to $20,500 a year. The difference here is that the student is responsible for paying back the entirety of the loan plus interest. The third type of loan is the Direct PLUS loan that can be claimed by parents of dependents. These loans are intended to cover additional expenses not covered by financial aid. The application involves a credit check, but once that’s completed and approved, parents are able to take out what is necessary to cover the rest of their child’s financial needs. The final loan is a Direct Consolidation Loan. This loan is for students with loans from multiple different places. The Direct Consolidation Loan combines all of your loans into one convenient loan. This way you’re able to pay a single provider once a month rather than having to keep track of multiple loan payments.

Perkins Loan Program

These loans are provided to undergraduate and graduate students that prove a great financial need. The money is borrowed directly from the student’s school. The value offered for this loan varies depending on need, financial aid already received and availability of school funds. The cap is $5,500 per person for undergrads, but graduate students can be awarded up to $8,000 a year. Considering these loans are provided by the school directly, the requirements are more exclusive than other loan programs. Be sure to stop by your schools financial aid office and regularly meet with your advisors to put together an effective loan payment plan.