Federal Loans Overview: the Backbone of Student Aid
Federal student loans are the most common form of federal student aid, representing about three quarters of the approximately $100 billion spent by the federal government on student aid. Almost all students can benefit from these programs. Unlike grants, all loans must be paid back with interest. Some loans are subsidized to reduce the cost of the loan for low-income students. Below is an overview of each type of federal loan.
Perkins Loans
Perkins loans are the lowest-cost loans, designed to help the most financially needy students. These have recently had a fixed five percent interest rate and do not start accruing interest until repayment begins. These loans are only available to the neediest students. Learn more about Perkins Loans.
Stafford Loans
Stafford Loans are available to most students although subsidized loans are limited to those who have significant financial need. There are limits on how much a student can borrow for both subsidized and unsubsidized loans. Review BrainTrack's Stafford Loans article for more information.
Parent PLUS Loans
Parents of dependent undergraduate students can use these loans to help pay their child’s college costs. There is no financial-need requirement for this loan but parents must have a good credit history. Learn more details about Parent PLUS Loans.
Student PLUS Loans for Graduate and Professional Students
Similar to PLUS loans available to parents, these PLUS loans are available to graduate and professional students to help pay college costs. Get more details about the Student PLUS Loan program.
Federal Consolidated Loans
These types of loans allow students to consolidate all outstanding federal student loans into one loan. The goal is to make payments more manageable for students by combining and extending the payments. Read more about Federal Consolidated Loans.
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