Student Financing 101: Stafford, Perkins and Specialty Federal Loans

Students in a college classroom.

Photo Credit: Flickr/SMB College

In our first installment of Student Financing 101 we reviewed loans available from the government under the William D. Ford Federal Direct Loan Program. We took a look at the Direct Subsidized Loan, the Direct Unsubsidized Loan, Direct PLUS Loans for Parents, and the Direct PLUS Loan for Graduate or Professional Students.

In the second installment of our Student Financing 101 blog series, we take a look at Stafford Loans, the Federal Perkins Loan Program, loans available under the Public Health Service Act, and federal consolidation loans.

Note: Current federal law has set a new interest rate in place for federally subsidized loans. The new current interest rate is at 6.8 percent. This rate increase took effect on July 1st and affects loans that were taken out after the July 1st date. This affects Stafford/Direct Subsidized Loans only and not any other federal loans for undergraduate students, graduate students, or parent borrowers.

Federal Student Loans under the Direct Loan Program

  • The Federal Perkins Loan Program (so named after Representative Carl D. Perkins of Kentucky) is awarded through the college; the college acts as the lender and the borrower repays the college. The Federal Perkins Loan is for both undergradate students (the award is limited to $5,500 for undergrads) and graduate and professional degree students (the limit is $8,000). Applicants have to demonstrate financial need and the funds are based on availability. Perkins Loans recipients may be eligible for Federal Student Loan Forgiveness under the Teacher Cancellation provision. If you are a full-time teacher in a public elementary school or secondary school in a low-income district or teach in a specific field, you may qualify for either discharge or deferment.

Federal Student Loans Under FFEL

  • Stafford Loans are named in honor of Senator Robert Stafford of Vermont. It was previously called the Federal Guaranteed Student Loan Program. What’s the difference between a Direct Loan and a Stafford Loan? It depends. While every Stafford Loan is a Direct Loan (either subsidized or unsubsidized), not every Stafford Loan is a Direct Loan. Under what was called the Federal Familiy Education Loan (FFEL) Program, Stafford Loans and Unsubsidized Stafford Loans were available; these loans, now made under the William D. Ford Federal Direct Loan Program, are the Direct Subsidized amd Direct Unsubsidized Loans (you can learn more about them in our first installment, Student Financing 101: Federal Student Loans).

Public Health Service Act

  1. Health Professions Student Loans (HPSLs) are part of Title VII of the Public Health Service Act. Under the act are federal loans available to full-time students who demonstrate a financial need for the money. These students need to be pursuing a degree at a participating school in the following specialties:

    • Dentistry;
    • Optometry;
    • Pharmacy;
    • Podiatry; or
    • Veterinary Medicine
  2. Nursing Student Loans (NSLs) are another loan program available under the Public Service Health Act (this being under Title VIII). Nursing Student Loans are available to full-time and half-time students who have a financial need (you may also need to provide financial information about your parents) and who are studying toward a diploma, associate degree, baccalaureate, or graduate degree in nursing. It’s up to the schools taking part in the program to pick loan recipients and for figuring out the financial assistance that the student needs.
  3. The Primary Care Loan Program is for full-time students with a demonstrated financial need. This loan is specific to medical students who are seeking a degree in allopathic (mainstream, not alternative) medicine or osteopathic medicine. A requirement for a Primary Care Loan is entry into residency training for primary care within four years of graduating as well as practicing primary care during the life of the Primary Care Loan.
  4. The Loans for Disadvantaged Students program touches degrees covered by the Health Professions Student Loans Program (dentistry, optometry, pharmacy, podiatry, and veterinary medicine) and the Primary Care Program (allopathy and osteopathy), and is for full-time students who have a disadvantaged background and financial need. Like the Nursing Student Loans Program, participating schools select the students who will receive the loan and also determine the need for the loan.

Our next entry into the Student Financing 101 series will go over federal Direct Consolidation Loans and the differences between federal student loans and private loans.