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What are Federal Student Loans?

Also known as government loans, that  allow students and parents/guardians to borrow money for college directly from the federal government.

1. Subsidized Stafford
 

The Subsidized Stafford loan offers the lowest interest rate. Borrowers must meet a financial needs test to qualify. Graduate and professional students are not eligible for these loans.

2

Unsubsidized Stafford

Unsubsidized Stafford loans are made without regard to financial need.  That means any student can get one.

3

Perkin

The schools that participate in the Perkins Loan program select the students who are eligible to receive these favorable loans from a limited pool of funds made available by the government. The student borrowers must prove financial need. The interest rate on these loans is set at a relatively low rate, and is paid by federal government while the student is enrolled in school.

4

PLUS

PLUS Loans (Parents Plus) are available to parents with dependent undergraduate, graduate, and professional degree students. PLUS Loan applicants must have a qualifying  credit history.

4

Consolidation Loans

Consolidation Loans are available for borrowers with existing federal student loans (Direct or FFEL) in order to combine the loans and extend payment schedules and terms. A borrower’s existing loans are paid off and a new consolidation loan is created. Although the monthly payment amount on a consolidation loan usually is lower than for the combined existing loans, this benefit comes at the price of a longer repayment period. Interest rates for these loans currently are fixed, but have historically been priced based on U. S. Treasury bill interest rates. Whether based on a fixed or variable rate, the interest rate does not reflect the borrower’s risk – if the borrower is eligible for a loan, he or she will be charged the same rate as any other eligible borrower.