Written and reviewed by FinanceCruncher Editorial Team
Last reviewed 2026-07-13. Sources and assumptions are documented below.
This reference is for education only. It is not financial, tax, or legal advice.
Federal student loan and grant types
All amounts below are annual limits for undergraduates unless noted. Interest rates are fixed for the life of each loan and set by Congress each July 1 based on the prior May's 10-year Treasury note auction. Rates shown in the table below are from the 2024–25 award year and are provided for reference — verify current-year rates at studentaid.gov/interest-rates. For repayment planning, see the plan comparison calculator.
Federal student loan types
| Loan type | Who it's for | Rate (2024–25 reference) | Subsidized? | Grace period | Annual limit | Lifetime limit | Notes |
|---|---|---|---|---|---|---|---|
| Direct Subsidized | Undergrad with financial need | 6.53% | Yes — govt pays interest in school & grace | 6 months after leaving school | $3,500–$5,500/yr | $23,000 | Best deal available. Requires FAFSA demonstrated need. |
| Direct Unsubsidized | Undergrad & grad, any income | 6.53% (undergrad) 8.08% (grad) | No — interest accrues immediately | 6 months after leaving school | $2,000–$7,000/yr above subsidized | $31,000 (dependent) $57,500 (independent) | Unpaid interest capitalizes at repayment start. |
| Direct PLUS (Grad) | Graduate & professional students | 9.08% | No | 6 months (optional deferment while enrolled) | Up to cost of attendance minus other aid | No limit | Credit check required. Only IDR plan is ICR unless consolidated. |
| Direct PLUS (Parent) | Parents of dependent undergrads | 9.08% | No | Can defer while student enrolled + 6 mo | Up to cost of attendance minus other aid | No limit | Parent is borrower. Must consolidate for IDR (ICR only). Not PSLF-eligible on its own. |
| Direct Consolidation | Borrowers with multiple federal loans | Weighted average (rounded up to nearest ⅛%) | Depends on loans consolidated | Repayment begins within 60 days | N/A | N/A | Resets PSLF/IDR count. Makes FFEL/Perkins eligible for IDR & PSLF. |
| FFEL Loans (legacy) | Pre-2010 borrowers | Varies (legacy) | Some subsidized, some not | 6 months | N/A (no longer issued) | N/A | Must consolidate into Direct for PSLF and most IDR plans. |
| Perkins Loans (legacy) | Pre-2018 borrowers with exceptional need | 5% (fixed) | Yes | 9 months | N/A (program ended) | N/A | Held by school. Consolidate to access PSLF. |
Federal grants (don't need to be repaid)
Grants are free money — no repayment required unless you withdraw or fail to meet conditions.
| Grant | Who qualifies | Amount (2024–25 reference) | Renewable? | Key conditions |
|---|---|---|---|---|
| Pell Grant | Undergrads with exceptional financial need | Up to $7,395/yr | Yes — up to 12 semesters | Based on EFC/SAI from FAFSA. Must maintain enrollment. |
| TEACH Grant | Education majors committing to teach in high-need schools | Up to $4,000/yr | Yes, per year enrolled | Must teach full-time in a high-need field at a low-income school for 4 years within 8 years. Converts to unsubsidized loan if conditions not met. |
| FSEOG | Undergrads with exceptional need (priority: Pell recipients) | $100–$4,000/yr | Depends on school funding | School administers limited funds — apply early via FAFSA. |
| Iraq & Afghanistan Service Grant | Students whose parent died in military service post-9/11 | Up to Pell maximum | Yes | Parent/stepparent must have been a U.S. armed forces member who died in service after 9/11/2001. |
TEACH Grant warning
If you do not complete the four-year teaching service obligation, the TEACH Grant converts to an unsubsidized Direct Loan — with interest backdated to when you received it. Only choose it if you are committed to the teaching requirement. Read the official terms at studentaid.gov before accepting.
Subsidized vs. unsubsidized — the key difference
| Scenario | Subsidized | Unsubsidized |
|---|---|---|
| While enrolled at least half-time | Govt pays interest | Interest accrues on your balance |
| During 6-month grace period | Govt pays interest | Interest accrues & capitalizes |
| During authorized deferment | Govt pays interest | Interest accrues |
| During repayment | You pay interest | You pay interest |
| During forbearance | Interest accrues (no subsidy) | Interest accrues |
On a $10,000 unsubsidized loan at 6.53%, four years in school plus a six-month grace period can add roughly $3,100 in capitalized interest before your first payment — raising the effective balance to about $13,100.
Official resources
Direct links to StudentAid.gov for every loan type, grant, and key tool — all government sources.