Federal Student Loans
If you need a loan for college, think Federal Aid First! Federal loans usually offer borrowers lower interest rates and have more flexible repayment options than private loans.
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The following explains the differences between federal and private education loans, the various kinds of federal loans offered and the dollar amounts available. Think Federal Aid First! |
What is a federal student loan?
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 usually have low interest rates and offer attractive repayment terms, benefits and options. Generally, repayment of a federal loan does not begin until after the student leaves school. Federal student loans can be used to pay school expenses such as tuition and fees, room and board, books, supplies and transportation.
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. Private student loans often have variable interest rates, require a credit check and do not provide the benefits of federal student loans.
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, loan forgiveness and deferment options, including deferment of loan payments when a student returns to school. For these reasons, students and parents should always exhaust federal student loan options before considering a private loan.
How do I get a federal student loan?
To get a federal student loan, you must complete the Free Application for Federal Student Aid (FAFSA). The easiest way to complete the FAFSA is online at www.fafsa.ed.gov. Here, you identify schools that you are interested in attending. When your FAFSA is processed, the schools you have identified will receive your information. The school will then tell you how much financial aid is available, including grants, scholarships, work opportunities and federal student loans. Should you choose a federal student loan, your school will provide you with instructions on next steps, including how to select a lender.
How much money can I borrow in federal student loans?
Undergraduate student loan limits range from $3,500 to $10,500 per year depending on certain factors, including the student's year in college. Graduate students can borrow up to $20,500 each year. Parents can also get federal student loans to help pay the remainder of college costs that are not covered by their children's other financial aid. These are called PLUS loans. In addition, graduate students may obtain PLUS loans to help pay for their own education.
Why should I complete a FAFSA when the private loan application process may be easier?
While the application process may be easier in some instances, federal student loans usually have lower interest rates and better repayment terms and options than private student loans. Additionally, schools use the information provided on the FAFSA to determine eligibility for other types of financial aid provided by the federal government, from your state, or from the school itself. This aid can include grants, scholarships and work opportunities.
Click on the name of a loan below for more information about the loan type:
Ready to Apply?
Click here to begin the Stafford Loan process.
Click here to begin the Parent PLUS process.
Click here to begin the GradPLUS process. |
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