What is a Federal Student Loan?

Federal student loans are how many of America’s college students are paying for their higher education. A federal student loan is a loan for financial assistance that is administered through the US Government Department of Education to a student that is enrolled in an eligible program at a school that participates in the federal student aid program.

A federal school loan can be used to for tuition, room and board, books, fees and supplies. Your loan can even be used to pay for transportation, a computer and childcare expenses. To get a federal education loan you must do the following things:
• Show financial need (with a few exceptions).
• Be involved in an eligible program, working towards a degree or certification.
• Be a US citizen or an eligible noncitizen with a Social Security number.
• You must have graduated high school, passed an approved ability-to benefit test or have completed approved home schooling.
• If you are male you must have registered with the Selective Service.
• Once enrolled in college, you must maintain minimum academic requirements.

If you meet all of these requirements you will be eligible to apply for one of the following types of loans:
• Federal Perkins Loan-this loan has a $4,000 maximum for undergraduate students and a $6,000 maximum for graduate students. The interest on this loan is 5% and payments will be made to the school that issued the loan.
• Subsidized Direct or FFEL Stafford Loan-you can borrow $2,625-$8,500, depending on your grade level. As long as you are at least a half-time student, the government will pay the interest on this loan while you are in school, during your grace period and any deferment periods.
• Unsubsidized Direct or FFEL Stafford Loan-you can borrow $2,625-$18,500 depending on your grade level (this figure also includes any amounts awarded that are subsidized). You must be at least a half-time student; you are responsible for the interest through out the life of the loan. This type of loan is not based on financial need.
• Direct for FFEL PLUS Loan-the amount of this loan is based on the cost of attendance, minus anything that is awarded to the student. This loan is available to the parents of half-time, undergraduate students.

As long as you meet the minimum requirements listed above, you are eligible to apply for any of these federal loans. These loans all have to be paid back, but they will help you reach your education goals with a very reasonable interest rate and in most cases your payments will be deferred until six months after you graduate.