Federal Student Loans
About 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.
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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.
Types of Federal Student Loans
There are three major types of federal student loans, and these are as follows:
- Stafford Loan
- PLUS Loan
- Perkins Loan
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.
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.
Frequently Asked Questions
Q:What are federal school loans?
A:Federal school loans, otherwise known as federal student loans, are loans offered by the federal government through the Department of Education. Federal school loans are disbursed to students who demonstrate financial aid, but certain forms of aid, such as the unsubsidized Stafford loan, can be obtained by students who do not have any demonstrated financial need. All federal school loans require students to submit the Free Application for Federal Student Aid (FAFSA) along with their applications. Federal student loans offer the cheapest interest rates and flexible payment schedules.
Q:What are the benefits of student federal loans?
A:Student federal loans offer a number of benefits over any other form of financial assistance to students. Firstly, student federal loans offer the lowest interest rates and have the most flexible borrower terms of any loans available to college students. They allow students to defer their loan payments until after graduation, which makes repayment less stressful. Additionally, student federal loans provide students with a grace period after graduation to find a job and then begin loan repayment. Student federal loans are disbursed according to the applicant's financial need, though certain student federal loans, such as unsubsidized Stafford loans, can be taken out without demonstrated financial need. Student federal loans do not require students to have a good credit history or a co-signer.
Q:When do I have to pay federal student loans back?
A:Federal student loans offer borrowers a number of advantages, and one of these is the allowance for students to defer repayment and to let them pay federal student loans back after they have completed their education. Students can defer their loan repayments and begin repaying the loan after graduation. Most federal student loans allow applicants a defined grace period, which allows them to find a good employment opportunity and then start repaying the loan.
Q:How do I know what I can receive in federal government student loans?
A:Federal government student loans are the least expensive and the easiest form of raising finance for education. Federal student loans are awarded to students who demonstrate financial need, and are also given out at a low, fixed interest rate. In order to determine how much you will receive in financial aid, you need to calculate the estimated family contribution (EFC), which you can do through our EFC calculator. Once you determine what your EFC is, you may get a better sense of what you will be awarded in federal government student loans.