Educational Loans

Loans can be an invaluable resource for financing an education. While loans are a type of financial aid, they are not a gift like grants and scholarships, since loans need to be repaid eventually. Loans are mostly a tool for liquidity management: students can postpone paying a portion of their educational costs until they complete their education or leave school. The repayment period on most loans can extend up to 10 years after graduation or leaving school.

Graduating with educational debt is a fairly common experience for students. At Caltech, however, the average educational indebtedness at graduation is significantly lower than the national average for students attending four-year private and public colleges. See borrowing statistics at Caltech.

Disclosure

• Federal Student Loans are required by law to provide a range of flexible repayment options, including but not limited to, income-based repayment and income contingent repayment plans, and loan forgiveness benefits which other student loans are not required to do.
• Federal loans are available to students regardless of income.

This program offers eligible students and parents the opportunity to borrow money directly from the federal government to help pay the cost of attendance at Caltech. The U.S. Department of Education makes loans, through Caltech, directly to students and/or parents. The Institute will use the loan(s) to pay your tuition/fees and other direct charges such as housing and food/meals, and give the student any remaining money for indirect costs. Students and/or parents make their repayments directly to the federal government.

1. The Federal Direct Stafford Loan Program;
2. The Federal Direct Parent PLUS Loan Program;
3. The Federal Direct Graduate PLUS Loan Program; and
4. The Federal Direct Consolidation Loan Program.
   

There are two types of Federal Direct Stafford Loans: subsidized and unsubsidized. The federal government pays the interest on subsidized loans while the borrower is enrolled at least half-time and during authorized periods of deferment. The interest on unsubsidized loans begins to accrue immediately upon disbursement and is generally capitalized (added to the amount borrowed) when the borrower is no longer enrolled at least half-time.

Eligibility for Direct Subsidized Stafford Loans is based on financial need as demonstrated by the FAFSA. Students who do not demonstrate sufficient need or whose need is met may borrow Direct Unsubsidized Stafford Loans provided their total financial aid, including the Stafford Loan, does not exceed the total estimated cost of attendance.

Dependent undergraduate students (excluding students whose parents cannot borrow Parent PLUS loans) may borrow Stafford Loan amounts not to exceed an annual total of

• $5,500 for first-year students, with a maximum of $3,500 in subsidized Stafford;
• $6,500 for second-year students, with a maximum of $4,500 in subsidized Stafford; and
• $7,500 for third- and fourth-year students, with a maximum of $5,500 in subsidized Stafford.

Independent undergraduate students and dependent undergraduate students whose parents are unable to borrow Parent PLUS loans may borrow additional Direct Unsubsidized Stafford Loan amounts not to exceed an annual total of

• $9,500 for first-year students, with a maximum of $3,500 in subsidized Stafford;
• $10,500 for second-year students, with a maximum of $4,500 in subsidized Stafford; and
• $12,500 for third- and fourth-year students, with a maximum of $5,500 in subsidized Stafford.

Graduate students may borrow Direct Unsubsidized Stafford Loan amounts not to exceed an annual total of $20,500.

The maximum outstanding total subsidized and unsubsidized Stafford Loan debt is

• $31,000 for dependent undergraduate students, with a maximum of $23,000 in subsidized Stafford;
• $57,500 for independent undergraduate students (or for dependent undergraduate students whose parents do not qualify for PLUS loans), with a maximum of $23,000 of this aggregate amount in the form of subsidized loans; and
• $138,500 for graduate students (including loans for undergraduate study), with a maximum of $65,500 of this aggregate in the form of subsidized loans.
  

The interest rate on subsidized and unsubsidized Stafford Loans disbursed for enrollment periods that begin after July 1, 2024 is currently scheduled to be fixed at 6.53% for undergraduate students.

Stafford loans are also subject to a loan fee, which is a percentage of the loan amount.  Loans are assigned a fee percentage based on the date their first disbursement is made.

The maximum repayment period under this program is 10 years, not including authorized periods of deferment. Direct Stafford Loans have a six-month grace period that starts the day after the borrower graduates, leaves school, or drops below half-time enrollment. Repayment begins when the grace period ends. Deferments are available for new borrowers during at least half-time enrollment at an eligible institution; during periods of academic study in approved graduate fellowship or rehabilitation programs; and for periods of unemployment and economic hardship.

Applications for Federal Direct Stafford Loans are available on the Caltech Financial Aid Office website finaid.caltech.edu/typesofaid/loans/stafford. Complete information on Stafford Loan deferments and repayment options is also available from the Financial Aid Office.