Federal Student Loans

federal student loans
Federal student loans are a form of financial aid provided by the federal government designed for students who need financial assistance to attend college. There are a variety of Federal student loans, some of which are disbursed on the basis of financial need, and others that are not. Regardless of which loan you may receive or choose, federal student loans are a great way to cover college costs, and should be exhausted before pursuing private student loan options.

As of July 1, 2010, all federal student loans are disbursed through the Department of Education. Before this date, a program called the Federal Direct Loan Program existed which served to disburse loans to students directly, without dealing with a third party lender. Now, all federal loans are given out through this Direct Loans program.

Financial Aid

Types of Federal Student Loans

There are three major types of federal student loans, and these are as follows:

Stafford loans can be either subsidized or unsubsidized. Subsidized Stafford loans are awarded on the basis of financial need, and the government pays the interest that accrues on this loan while the student is in school. Both types of Stafford Loans have a relatively low, fixed interest rate, and are desirable forms of funding.

bank loans
PLUS loans are for parents of college students, and can be obtained regardless of financial need. They offer relatively low, fixed interest rates, and are a good source of funding when all other federal student loan options are exhausted.

Perkins Loans are the last notable form of federal student loans. They are awarded on the basis of extreme financial need, and are subsidized. While very favorable to borrowers, they make up only 2% of all student loans, so they are extraordinarily difficult to receive.

In order to receive any of these loans, you must file the Free Application for Federal Student Aid (FAFSA). Federal student loans are a great source of funding for college, but you never want to borrow more than you have to: remember to seek out grants and scholarships before pursuing loans, and remember to exhaust all of your federal student loan options before looking for other sources of funding. If you still need money for college after using all federal student loans available to you, use our Student Loan comparison tool to search for and compare the private student loan options available to you.

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Types of Student Loans