Students: Federal Student Loans
...
Summary
This article provides general federal loan information that is required by the Department of Education.
Federal Student Aid / Loans
http://www.studentaid.ed.gov/
Will you need a loan to attend college? If so, think federal aid first. Federal student loans usually offer borrowers lower interest rates and have more flexible repayment terms and options than private student loans.
What is a federal student loan?
Federal loans are borrowed funds that you must repay with interest. A federal student loan allows students and their parents to borrow money to help pay for college through loan programs supported by the federal government.They have low interest rates and offer flexible repayment terms, benefits, and options.What is a private student loan?
A private student loan is a nonfederal loan issued by a lender such as a bank or credit union. If you're not sure whether you're being offered a private loan or a federal loan, check with the financial aid office at your school.Why are federal student loans a better option for paying for college?
Federal student loans offer borrowers many benefits not typically found in private loans. These include low fixed interest rates, income-based repayment plans, cancellations for certain employment, and deferment (postponement) options, including deferment of loan payments when a student returns to school. Also, private loans usually require a credit check. For these reasons, students and parents should always exhaust federal student loan options before considering a private loan.
What kinds of federal student loans are available?
...
Federal Perkins Loan
...
For undergraduate and graduate students
Funds depend on student's financial need and availability of funds at the college
College is the lender; payment is owed to the college that made the loan
...
Undergraduate students: up to $5,500
Graduate and professional degree students: up to $8,000
...
Direct Subsidized Loan
...
For undergraduate students who are enrolled at least half-time* and demonstrate financial need
Student is not charged interest on the loan while in school and during deferment periods
The U.S. Department of Education (ED) is the lender; payment is owed to ED
...
Between $3,500 and $5,500 depending on year in school
...
Direct Unsubsidized Loan
...
For undergraduate and graduate students who are enrolled at least half-time*
Student is responsible for interest during all periods
ED is the lender; payment is owed to ED
...
Between $5,500 to $20,500 (minus any subsidized amount received for the same period) depending on year in school and dependency status
...
Direct PLUS Loan for Parents
...
For parents of dependent students
Dependent students must be enrolled at least half-time*
Parent must not have negative credit history
Parent is responsible for interest during all periods
ED is the lender; payment is owed to ED
...
Maximum amount is cost of attendance* minus any other financial aid the student receives
...
Direct PLUS Loan for Graduate or Professional Students
...
For graduate or professional degree students who are enrolled at least half-time*
If the student has not requested the annual maximum Unsubsidized Stafford Loan amount they are eligible for, the school must notify the student of this eligibility and give them the opportunity to request it
Student must not have negative credit history
Student is responsible for interest during all periods
ED is the lender; payment is owed to ED
...
an overview of the types of federal student loans available through the U.S. Department of Education. It aims to inform students about the different loan options under the William D. Ford Federal Direct Loan Program to help them make informed financial decisions regarding their education.
Federal Student Loan Program Overview
The primary source of federal student loans is the William D. Ford Federal Direct Loan (Direct Loan) Program. In this program, the U.S. Department of Education acts as the lender, offering several types of loans to meet the diverse needs of students and their families.
Types of Federal Student Loans
Direct Subsidized Loans
Eligibility: Available to eligible undergraduate students who demonstrate financial need.
Purpose: Helps cover the costs of higher education at colleges or career schools.
Interest: The government pays the interest on these loans while you’re in school at least half-time, during the grace period, and during deferment periods.
Direct Unsubsidized Loans
Eligibility: Available to undergraduate, graduate, and professional students. Financial need is not required.
Purpose: Assists students in covering education expenses.
Interest: Interest accrues during all periods, including while you are in school and during grace and deferment periods.
Direct PLUS Loans
Eligibility: Available to graduate or professional students and parents of dependent undergraduate students. A credit check is required, and those with adverse credit histories must meet additional criteria.
Purpose: Covers education expenses not covered by other financial aid.
Interest: Interest accrues from the time the loan is disbursed.
Direct Consolidation Loans
Eligibility: Allows you to combine multiple eligible federal student loans into a single loan.
Purpose: Simplifies loan repayment by consolidating multiple loans into one with a single loan servicer.
Interest: Offers a fixed interest rate based on the weighted average of the interest rates of the loans being consolidated.
Additional Information
For comprehensive details on federal student loans, including eligibility requirements, interest rates, and application procedures, visit the Federal Student Aid website.
Conclusion
Federal student loans offer various options to support students in financing their education. Understanding the different types of loans available under the Direct Loan Program can help students choose the best option for their financial situation.