Types of Loans
Undergraduate and postgraduate students as well as parents of undergraduate students may borrow money for university education.
There are four types of loan options for students studying at the University of Edinburgh.
The interest rates quoted below apply to Federal Direct Student Loans 2020-2021, effective for loans with a first disbursement on or after 1st July 2020, and before 1st July 2021.
Interest rates for 2021-2022 loans with a first disbursement on or after 1st July 2021 are expected to be confirmed in May 2021. Information on origination fees is explained for the different loan types in each section below.
For information about temporary interest rate and repayment relief related to the Coronavirus pandemic please refer to Federal Student Aid's Coronavirus and Forbearance Info for Students, Borrowers and Parents
1. Federal Direct Subsidized and Unsubsidized Loans
Federal Direct Subsidized and Unsubsidized Loans are available to eligible students who complete the Free Application for Federal Student Aid (FAFSA) on the Web. This federal student aid is made available through the William D. Ford Federal Direct Loan Program to help pay for educational expenses and does not require credit approval.
Scholarships and Student Funding Services awards a Direct Subsidized or Direct Unsubsidized Loan, or a combination of both loans, based on your financial need.
The information you report on your FAFSA is used to determine your Expected Family Contribution (EFC), which is a calculated formula that allows the University to determine your financial need. To determine your financial need, your EFC is subtracted from your cost of attendance.
Federal Direct Subsidized Loan
A federal Direct Subsidized Loan is awarded on the basis of financial need. The U.S. government pays interest on a subsidized loan while you are enrolled at university at least half-time and during deferment periods. Direct Subsidized loans for undergraduate students will have an interest rate of 2.75% (from 1st July 2020).
Please note that graduates are not entitled to a Direct Subsidized Loan but may apply for up to $20,500 from the Direct Unsubsidized Loan (subject to approval by Financial Aid staff within Scholarships and Student Funding Services).
Federal Direct Unsubsidized Loans
A federal Direct Unsubsidized loan is awarded regardless of need. The interest rate for federal Direct Unsubsidized loans is fixed at 2.75% (from 1st July 2020) for undergraduate borrowers and 4.30% (from 1st July 2020) for graduate borrowers. You are not required to pay the interest on this loan while at university but we recommend that you do. You will be charged interest starting at disbursement until it is paid in full. If the interest accumulates, it will be added to the principal amount of the loan and increase the amount to be repaid.
A fee of 1.059% will be deducted from the gross amount of the loan you borrow, so you may wish to take this into consideration when determining the amount you need to borrow. Any Subsidized or Unsubsidized loans originated with a first disbursement date on or after 1st October 2020 will have a revised fee of 1.057%.
2. Federal Direct Parent PLUS Loan
Parents of dependent undergraduate students can borrow a federal Direct Parent PLUS Loan to help pay for educational expenses at the University of Edinburgh.
Parents can borrow up to the total Estimated Cost of Attendance minus all other sources of financial aid their student receives.
PLUS loans are the financial responsibility of the parents and not the student.
A parent PLUS loan borrower must meet the same citizenship and residency requirements as the student. The parent must not owe a refund on a federal student financial aid grant or be in default on a federal student loan.
A credit check is conducted when your parents begin the loan application process. Undergraduates whose parents do not qualify for a PLUS loan can borrow additional federal Direct Unsubsidized loan funds.
The interest rate is fixed at 5.30% (from 1st July 2020) and repayment begins within 60 days after your loan is fully disbursed and lasts ten years.
Origination fees for Direct Parent PLUS loans are set at 4.236%. Loans originated with a first disbursement date on or after 1st October 2020 will have a revised fee of 4.228%.
3. Federal Direct Graduate PLUS Loan
The federal Direct Graduate PLUS Loan is a federal loan that graduate students with good credit histories may borrow to help pay their educational expenses.
A graduate student may borrow up to the total Cost of Attendance less all other financial aid received by the student.
Applicants for these loans are required to complete the Free Application for Federal Student Aid (FAFSA).
They also must have applied for their annual loan maximum eligibility under the federal Unsubsidized Direct Loan Program before applying for a Graduate/Professional PLUS loan.
The interest rate is a fixed rate of 5.30% (from 1st July 2020) and is charged on the loan from the time the loan funds are disbursed until it is paid in full. There is a 4.236% loan origination fee deducted from the loan by the U.S. Department of Education, loans originated with a first disbursement date on or after 1st October 2020 will have a revised fee of 4.228%.
Repayment begins on the date of the last disbursement of the loan and the first payment is due within 60 days after the date the loan is fully disbursed. A Graduate PLUS borrower may receive a deferment while he or she is enrolled on at least a half-time basis at an eligible school. Upon dropping to less than half-time enrollment status, the borrower is not entitled to a grace period on his or her PLUS loans.
4. Private Alternative Loan
A private alternative loan is a non-federal education loan, through a private lender, typically in the student’s name and requiring a cosigner. Approval and interest rates are based on the creditworthiness of the borrower and cosigner. Each alternative lender has different eligibility requirements, loan rates, terms, and conditions.
Students who are eligible for federal student aid should complete the FAFSA and exhaust all federal loans and scholarship opportunities, before applying for a private alternative loan. Federal student loans generally have more favourable terms and conditions than private loans. We recommend that you utilise all federal loan eligibility before turning to private loans.
The University is willing to work with any lender who offers alternative educational loans to students enrolled at Foreign Institutions. Currently we are aware of only one such lender, Sallie Mae, but students are advised to explore all options available to them and can opt to use any lender.
Sallie Mae also offers a "Parent Loan" which gives parents and other individuals a flexible way to take out an education loan in their name, while relieving the student of financial responsibility. For more information please refer directly to Sallie Mae (see links below).