Type of Loans

Federal Direct Loans

These are federal loans borrowed directly from the federal government; they do not come from a bank or other lending institution, nor from your school. You sign a Master Promissory Note (MPN) when you take out these loans where you promise to pay back the federal government.

There are two types of Direct Loans for dental students: Direct Unsubsidized and Direct PLUS, detailed below. Borrowers should always maximize their full Direct Unsubsidized eligibility before taking out a Direct PLUS. These two loans often make up most, if not all, of a dental school student’s loan portfolio. Borrowers must complete a Free Application for Federal Student Aid (FAFSA) to be eligible for Direct Loans.

Direct Unsubsidized

• Annual amount: $40,500 per year, based on a nine-month budget; may be prorated higher for enrollment periods longer than nine months.
• Interest rate: Current rate is 8.08% fixed for loans disbursed on or after July 1, 2024.
  Note: The interest rate on these loans is fixed, but changes on new loans disbursed on or after July 1 of each year.
• Terms: These loans accrue (build up) interest during school and the six-month grace period following graduation before they come due. They are eligible for repayment with both time-driven repayment plans and income-driven repayment (IDR) plans and are eligible for forgiveness with the Public Service Loan Forgiveness (PSLF) program.
• Consolidation: These loans are eligible to be consolidated into the federal direct consolidation loan program. However, many recent graduates find they do not need to consolidate them since their rates are fixed and they usually have one loan servicer, meaning they can make one payment against all their loans.
• Credit: These loans are not based on credit.

Direct PLUS (also called Grad PLUS)

• Annual amount: There is no set annual limit, other than COA (cost of attendance / your financial aid budget) less other aid, including Direct Unsubsidized loans. This is what allows you to borrow up to the full COA, if needed.
• Interest rate: Current rate is 9.08% fixed for loans disbursed on or after July 1, 2024. Note: The interest rate on these loans is fixed, but changes on new loans disbursed on or after July 1 of each year. Please also note the interest rate on Grad PLUS is always 1% higher than Direct Unsubsidized loans.
• Terms: These loans accrue (build up) interest during school and the six months post-enrollment deferment period following graduation before they come due. They are eligible for repayment with both time-driven repayment plans and income-driven repayment (IDR) plans and are eligible for forgiveness with the Public Service Loan Forgiveness (PSLF) program.
• Consolidation: These loans are eligible to be consolidated into the federal direct consolidation loan program. However, many recent graduates find they do not need to consolidate them since their rates are fixed and they usually have one loan servicer, meaning they can make one payment against all their loans.
• Credit: Borrowers must be credit-ready (no adverse credit) to get Direct PLUS loans.

Health Professions Student Loan (HPSL)

These are federal loans from the Department of Health and Human Services (called Title VII) awarded by the health professions school or dental school. The loans are based on exceptional financial need (Contact your health professions school or dental school financial aid Office [FAO] regarding availability and application).

• Interest rate: There is a 5% fixed rate for the life of the loan.  
• Terms: These are subsidized/interest free during school and during a 12-month grace period. Repayment is generally over 10 years with level payments. HPSLs are not eligible for repayment with income-driven repayment options plans and are not eligible for forgiveness.
• Consolidation: These loans are eligible to be consolidated into the federal direct consolidation loan program, which would then make their balance eligible for repayment with income-driven repayment plans and forgiveness.

Loans for Disadvantaged Students (LDS)

These are similar to a Health Professions Student Loan but awarded specifically to students from disadvantaged backgrounds. (Contact your FAO regarding availability and application.)

Private Loans

Private loans have limited repayment and postponement options when compared with federal loans. Always speak with your FAO before applying for a private loan.

• Interest rate:   Rates may be variable or fixed, depending on the lender, with lower rates usually reserved for borrowers who secure a creditworthy cosigner.
• Terms: In most cases, these are unsubsidized with annual and cumulative caps on borrowing amounts. These loans are based, in part, on borrower being “creditworthy,” with a borrower's credit score considered in both approval and pricing. Private loans are not eligible to be repaid with income-driven repayment plans and are not eligible for forgiveness, including Public Service Loan Forgiveness.
• Consolidation: Private student loans are not eligible for consolidation into the federal direct consolidation loan program.