Department of Education Student Loans

Consider Loan ConsolidationProspective college students and parents new to student loan borrowing may find that they have a lot of information to parse through to understand the mechanics of student loan borrowing. Department of Education loans are often referred to simply as federal loans.

At the outset, it is important to note these general points about student loans:

Department of Education Loans

Currently, all U.S. Department of Education loans are administered under the Direct Loan program. Federal Perkins Loans are separate. These loans include:

According to Federal Student Aid, highlights of the Direct Loan Program include:

One of the greatest advantages of Department of Education loans is their comparatively low interest rate. As Federal Student Aid advises, interest rates are calculated each spring for the upcoming award year (July 1st  – June 30th) and based on financial market conditions. The calculated interest rate will remain fixed for the life of the loan. For instance, for Direct Loans for undergraduate students made on or after July 1, 2016, and before July 1, 2016, interest rates are:

Graduates in repayment who are considering a Direct Consolidation Loan are best advised to use the federal Online Calculator to determine the applicable interest rate.

How Much to Borrow

Although college financial aid offices will determine the available federal loan amounts, it is ultimately up to students to decide how much to borrow. As U.S. News & World Report discusses, students who are concerned about debt can take the following steps to curb borrowing:

While students cannot accurately predict their future, they can always act smartly in the present. Awareness of the perils of excessive borrowing can make students savvy money managers overall. Students are well advised to seek new scholarships and grants for each year of study. In addition, to cut down on living costs, resident assistant programs offer room and board in exchange for working for student life in the residence halls (usually only college juniors and seniors are eligible).

Need a private student loan? Compare your student loan options all in one place. SimpleTuition