University of Connecticut University of UC Title Fallback Connecticut

Financing Options

The Office of Student Financial Aid Services understands that paying for education can be challenging and confusing. We offer these tips to help families who need to borrow loans to cover the cost of education, and to find the best possible options.

1. Consider ways to keep your costs down to reduce student loan debt.

  • Create a budget to help you determine how much loan money you will need. Do not borrow more than you need.
  • Keep track of your loan debt and the amount you will have to repay when you graduate.

2. Take advantage of the interest-free Installment Payment Plan offered by the University to finance all or a portion of your fee bill. Further information is available at the Bursar’s Office.

3. If you need to borrow a loan, be sure to exhaust all of your federal loan eligibility before considering a private (alternative) student loan.


Why Choose a Federal Perkins or Federal Direct Stafford Loan Over a Private (Alternative) Loan?

Fixed Interest Rates

  • Federal student loans have low fixed interest rates (5% for Federal Perkins Loans, 3.76% for Federal Stafford Loans for undergraduates, 5.31% for graduate students) for the life of the 2016-17 loan. Rates don’t change based on volatile market conditions as they do for most alternative loans. You may think you have a good deal on your private loan now, but what would happen if the Prime or LIBOR rate on which the private loan is based increases significantly?
  • Federal student loans have low fixed interest rates (5% for Federal Perkins Loans, 4.45% for Federal Stafford Loans for undergraduates, 6% for graduate students) for the life of the 2017-18 loan. Rates don’t change based on volatile market conditions as they do for most alternative loans. You may think you have a good deal on your private loan now, but what would happen if the Prime or LIBOR rate on which the private loan is based increases significantly?

No Credit Check

  • Federal Direct Stafford and Perkins loans are not based on your credit. You don’t have to be credit-worthy or have any established credit to qualify for federal student loans.

More Flexible Deferment, Repayment, & Cancellation Options

  • Federal Direct Stafford and Perkins loans are both deferred while you are in-school. No payments are due for six months after you leave school in the case of Stafford loans, and nine months after you leave school in the case of Perkins loans. Also, if you qualify for Subsidized Stafford Loans or Perkins Loans, the government will pay the interest that accrues while you are in-school and during your grace period. This is not the case with Unsubsidized Stafford Loans or private (alternative) loans.
  • After you graduate, federal loans have more flexible repayment options than private (alternative) loans. Most private (alternative) loans don’t offer more than one year of forbearance (temporary suspension of payments at the discretion of the lender). Federal loans offer a variety of deferment options (temporary suspension of payments if you meet certain requirements, such as unemployment or economic hardship), and up to five years of forbearance if you are having trouble making payments.
  • In certain circumstances, your Federal Direct Stafford or Perkins Loan may be discharged (cancelled). This is not the case with private (alternative) loans.

Why Choose a Federal Direct PLUS Loan Over a Private (Alternative) Loan?

PLUS Loans are available to parents of undergraduate students. Graduate students may also borrow PLUS Loans on their own behalf.

Fixed Interest Rate

Federal Direct PLUS Loans have a fixed interest rate of 6.31% for 2016-17 and 7% for 2017-18, many alternative loans have a higher fixed or variable rate.

Deferment Provision

The parent (or graduate student) is the borrower. Repayment begins within 60 days of the final disbursement. However, the borrower is able to defer payments on PLUS Loans while the student is enrolled at least half-time.

Easier to Obtain

The Federal Direct PLUS Loan for parents or graduate students can be easier to obtain than a private (alternative) loan. While a credit check is required, the applicant’s credit score is not considered for PLUS eligibility. Rather, they are looking for the absence of adverse credit, such as bankruptcy, foreclosure, or default. If your parent (undergraduate students only) does not qualify, you will likely be eligible for an additional Unsubsidized Federal Direct Stafford Loan of up to $5,000. Parents or graduate students with adverse credit may apply for a PLUS Loan with a credit-worthy endorser. This may be a good option if your parent is denied and the additional Unsubsidized Stafford Loan is not enough to cover your needs.

Borrowing a Private (Alternative) Student Loan

If you decide to borrow a private loan, you should carefully research your options and understand the differences between the loan products before choosing a loan. You have the right to choose to borrow from any lender who participates in a private student loan program.