Federal Student Loan Programs

Federal student loans are a great for students to get financial aid without paying the astronomical interest rates offered at the local bank or lending agency. The Federal Student Loan Program supplies financial help for students enrolled in colleges that participate in federal aid programs. These loans are offered through Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDLP), which are branches of the U.S Department of Education.

There are three basic federal student loans that students may qualify for after completing the Federal Application for Financial Student Aid (FAFSA). These are the Stafford Federal Student Loan, the Perkins Loan, and the Graduate PLUS Loan.

There are two types of Stafford Federal Student Loans, subsidized and unsubsidized.  The amount of these loans varies based on your studies and program length.  The subsidized loan is based on financial need and once awarded there is no interest charged before you begin payment.  The federal government subsidizes the interest payments during this time.

The unsubsidized Stafford Federal Student Loans are available to any and all students.  These loans are not based on financial need and students receiving this loan are charged interest from the time they first receive the loan, until it is paid in full.

The Perkins Loan Program is a federal student loan available to low-income students.  This program provides low-interest loans ( only 5% interest ) to undergraduate and graduate students attending one of the institutions eligible for this funding.  Even better is that applicants who undertake certain public, military, or teaching service employment, are eligible to have all or part of their loans cancelled.  If you are an undergraduate student you can borrow $4,000 a year or $27,000 max through this federal student loan.  And if you are a graduate student you are eligible for a bit more, given the increased cost of graduate studies.  You can receive up to $8,000 a year, but no more than $60,000 overall.

The Graduate PLUS loan is a low, fixed interest rate student loan guaranteed by the U.S. Government. This loan has a fixed interest rate and federal guarantee. And you can borrow as much as your graduate costs dictate; subtracting the amount of any other financial aid you receive. These costs tuition, room and board, supplies, lab expenses, and travel.

And the Graduate PLUS loan is not based on financial need.  Any graduate student can apply and you won’t even need a co-signer.  Current receivers of the Graduate PLUS loan are only paying 8.5% interest.

All 3 of these Federal student loan programs generally cover all related school expenses, including tuition and fees, room and board, books and school supplies, as well as any transportation. Loans can also help pay for technology needs (i.e., a computer) and for necessary dependent care.

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