Federal Student Loans

Paying for school is a concern for most people when you begin to plan your college career. Federal student loans and grants make it possible to afford your degree. Which on is right for you though and are you eligible? There are many different forms of grants and student aid available besides the ones we mention below, but the three main types are the Federal PLUS, Federal Perkin,s and Federal Stafford Loans. All three require a  Free Application for Federal Student Aid (FAFSA) submission. This is used to determine your expected family contribution (efc) . Check with your college or universities financial aid office to see what aid is available to you at a local or school level as well as any FAFSA questions you may have.

Federal Stafford Loans

Federal Student Loans: Subsidized v. Unsubsidized

Federal student loans may be either Subsidized or Unsubsidized. They are both offered by the Department of Education to help cover the costs of attending a four-year college or university, community college, as well as trade, career, or technical school

Direct Subsidized Loans

Federally Subsidized loans usually have better terms over the life of the loan, and are designed to help undergraduate students that demonstrate the required financial need. Subsidized means that the U.S. Department of Education pays the interest on the loan during certain times. While you are in school, for the first six months after you leave school, and during any qualified deferment periods.

Eligibility Requirements

  • Enrolled in a qualified school or program at least half-time
  • Pursuing an undergraduate degree or certificate
  • Demonstrate adequate financial need

Direct Unsubsidized Loans

Unsubsidized loans provided by the federal government are available to both undergraduate and graduate students, with no need for the student to prove financial need in order to qualify for a loan.

The dollar amount that you are entitled to borrow will be determined by the school you plan on attending, and is based on the cost of attendance minus any other financial aid you will be receiving.

Interest accumulates at all times, and you are required to pay back the entire loan plus the interest.

Eligibility Requirements

  • Enrolled in a qualified school or program at least half-time
  • Pursuing an undergraduate degree or certificate, or a graduate or professional degree


PLUS Loans

Plus loans are intended to help students and parents of dependent students pay for education expenses. These loans are available through the school the borrower will be attending and are funded through the U.S. Department of Education.

Eligibility Requirements

  • Must be a graduate or professional degree student OR the parent of a dependent undergraduate student
  • Must be enrolled at least part-time in a degree or certificate program
  • Must demonstrate that you have financial need
  • Must be a U.S. citizen or eligible non-citizen

Perkins Loan Program

The Perkins Loan Program is a post-secondary education financial aid that has a lower interest rate, around 5%, for low income students. Only certain schools participate in this program so check with your financial aid office before applying.

Eligibility Requirements

  • Must be a U.S. citizen or eligible non-citizen
  • No unresolved defaults on other student loans
  • Complete a Perkins promissory note
  • Enrolled full or part time or have applied at a participating schools
  • Must express financial need
  • Select Service requirements have been met
  • Must have excelled academically

Private Loans vs. Federal Loans

There are pros and cons to each type of loan. Knowing these options and deciding which fits you and your education plans the best is key before applying. Private loans are obtained through a bank, credit union or other lending institution. Private loans do not require a FAFSA and ten to be higher in interest rates than federal loans. Private student loans are made directly to the student so it becomes their responsibility.

Federal loans are offered through your college or university and tend to have a longer application process, including the FAFSA, and can require face-to-face meetings before lending the money. These loans have a lower fixed rate and, most of the time, you do not have to pass a credit check which is usually the case with a private loan lender. Lastly Federal loans apply for the duration of your schooling while private student aid only applies to the applicable year.

Regardless of the pros and cons it is important to do your research and shop around between both options to make the best choice for you.


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