Federal Direct Loan Programs - What You Need to Know

Need-based student loans are appealing because they can be repaid over a long period of time with a low interest rate.

  • Another big benefit of loans is that UAB is a federal direct lender. That means UAB lends funds to you directly from the U.S. Treasury, so you don’t have to complete bank loan forms or wait for checks to arrive from lenders. You get the money right when you need it.
  • These loans are sponsored by the federal government, but UAB determines your eligibility and handles processing.
  • All first-time borrowers are required to complete entrance counseling online.


Federal Direct Stafford Loans

Unsubsidized Loan - A loan for which the government does not pay the interest. Currently, the fixed interest on this loan is 5.41%. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even while the student is still in school. Students may avoid paying the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the family contribution. See Stafford Loans for information about unsubsidized Stafford Loans.


Perkins Loans

Formerly the National Direct Student Loan Program, the Perkins Loan allows students to borrow at a 5% fixed interest rate to supplement Federal Stafford Loan awards. No interest accrues while the borrower is enrolled in school at least half-time. The Perkins Loan has one of the lowest interest rates and is awarded by the financial aid administrator to students with exceptional financial need. This loan carries a 9 month grace period following enrollment termination before repayment begins. The repayment period can be up to ten years. You must complete the FAFSA to be considered for this loan and your financial aid file must be complete while limited funding remains available. Regardless of age or marital status, the FAFSA must be completed, and parental information must be provided to be considered for this loan.


Graduate/Professional PLUS Loan

  • Maximum amount: the difference between your total cost of attendance and the amount of other financial assistance you receive each year.
  • Interest rate: fixed rate of 6.41 percent and interest begins accruing once funds are disbursed.
  • Repayment: Several plans are available, but repayment begins when funds are distributed.
  • Must complete and submit the FAFSA before applying for the PLUS.

Health Professions Students Loans (HPL) – Dental and Optometry students
and Loans for Disadvantaged Students (LDS) – All First Professions students

These low interest loans are awarded to students from economically disadvantaged backgrounds as determined by the federal need analysis system. Therefore, they require that you submit parent information on the FAFSA and that you submit the Health Professions Student Questionnaire (print off page & submit by mail or FAX: 205-934-8941).

Financial Aid will determine your eligibility based on the completed FAFSA and Questionnaire. The interest rate is 5%, and no interest accrues while the borrower is in school. Regardless of age or marital status, the FAFSA must be completed and parental information must be provided in order to be considered for these loans. Signed federal income tax forms for student/spouse and parents must be submitted to the Financial Aid Office.

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