Your school may include loans in its financial help package if you apply for financial assistance. When you borrow money, you have to pay interest on it.
If you decide to take out a loan, make sure you know who is making it and its terms and circumstances. The federal government may provide student loans and private sources like banks, financial institutions, or other organizations. Loans from the federal government, known as federal student loans, frequently have more benefits than loans from banks or other commercial sources. Learn more about the differences between private student loans and federal student loans.
What kind of federal student loans are available?
The United States Department of Education administers the federal student loan program. Within the framework of this program, your lender is the U.S. Department of Education. Direct Loans fall into four distinct categories:
Direct Subsidized Loans
Undergraduate students who meet the requirements and demonstrate a financial need for the money to assist with the cost of attending a college or career school are eligible for direct-subsidized loans.
Although eligibility is not based on financial need, loans are given to qualified undergraduate, graduate, and professional students.
Direct PLUS Loans
A Direct PLUS Loan may be available to parents of dependent graduate or professional students and undergraduate students to help with the expense of their children's education if other kinds of financial aid are unable to pay it. Economic necessity is not considered when determining eligibility, although a credit check is required. Poor credit history applicants must meet more requirements to be approved. Direct consolidation loans can be used to combine all of your federal student loans that are eligible into a single loan with a single loan servicer.
How much may I borrow in total through federal student loans?
Depending on your circumstance, you may be an undergraduate student, graduate or professional student, or parent.
Depending on their dependent status and the year they are enrolled in school, undergraduate students may borrow a maximum of $5,500 to $12,500 annually in Direct Subsidized Loans and Unsubsidized Direct Loans. In accordance with your school's approval, you may also use a Direct PLUS Loan to pay for the remaining percentage of your college expenditures that are not already covered by other forms of financial aid.
Why should I take out federal student loans?
Federal student loans are an investment in the future. Although you should use prudence, you shouldn't be reluctant to borrow money from the government for your education.
There are several benefits when comparing federal student loans to other college finance options, including:
Federal student loans feature a set interest rate that is usually less expensive than those offered by private lenders—and much cheaper than credit card interest rates!
What factors should I consider before taking out federal student loans?
It's critical to be aware of the legal ramifications of borrowing money before you do. The full amount of the loan plus interest must be repaid. Even though you are not obligated to begin repaying your federal student loans right away, you should not put off learning about your responsibilities as a borrower. Gather information: View the video about responsibly borrowing, or follow the suggestions below.
Be a reliable borrower.
Note the amount you borrow in a journal. Consider how much you can afford to repay and how the magnitude of your obligations will affect your financial condition. Don't borrow more than you need for school-related expenses because your student loan repayments after graduation should only take up a small portion of your income. Make frequent contact with your loan servicer.
Changes to your name, address, Social Security number, graduation, dropping below a half-time load, or any other life events should be reported to your loan servicer. Contact your servicer as your scheduled loan installments. Your servicer will provide you with several options to maintain your loan.
I wish to submit a federal student loan application.
To apply for a federal student loan, you must complete and submit a Free Application for Federal Student Aid (FAFSA®) form. Based on the results of the FAFSA form, your college or career school will give you a financial assistance package that can include federal student loans. Your school will explain how to accept all or a portion of the loan.
What Is the Federal Perkins Loan Program?
The Federal Perkins Loan Program helped students in need pay for college or technical training. The last day for colleges to provide new Federal Perkins Loans was September 30, 2017.
