Federal Student Loans

The U.S. Department of Education's Federal Student Aid programs provide more student aid than any other source in the country, providing more than $60 billion every year in grants, loans and work-study programs.

How can you get your share? Are You Eligible?
First, you must determine your eligibility. This is based on financial need and other factors. Your financial aid office can help you determine how much money you are eligible to receive from the federal government (if any). Some of the requirements include: financial need, high school diploma (or equivalent), you're working toward a degree/certificate in an eligible program, U.S. citizenship, Social Security Number (in most cases), registration with the Selective Service, academic good standing once you're in school and more. Be aware that if you've been convicted under federal or state law of selling or possessing drugs, you ill be ineligible for federal aid. Now that you've determined your eligibility, what types of loans are available?

Federal Perkins Loans
The Federal Perkins Loan is designed for undergraduate and graduate students with exceptional financial need and offers a low interest rate of five percent. These loans are available through your school's financial aid office. The school acts as the lender with this type of loan, so the loan must be repaid to the school. With this type of loan, you can get as much as $4,000 per year for undergraduate study, for a total amount of $20,000. You don't have to pay the loan back until nine months after you graduate, leave school or start attending less than half time.

Stafford Loans
The Federal Family Education Loan (FFEL) program and the William D. Ford Federal Direct Loan (Direct Loan) program are both administered by the U.S. Department of Education and are divided into two groups: Stafford Loans (loans for students) and PLUS Loans (loans for parents). To get one of these loans, you have to fill out a FAFSA. Once it's processed, the school will look at the results and tell you how much you are eligible to borrow.

For a Direct Stafford Loan, the federal government acts as the lender. For an FFEL Stafford Loan, you'll need to evaluate your options and find a lender. Ask your financial aid office for a list of preferred lenders. Stafford Loans have a six-month grace period after you leave school or graduate before you repay. Once you have to repay, you'll either pay a private lender or loan servicer (for an FFEL Stafford Loan) or the U.S. Department of Education's Direct Loan Servicing Center (for a Direct Loan). Your school will give you more information about your repayment options.

PLUS Loans
A PLUS Loan is available for parent to help pay for your education, provided you are a dependent undergraduate student and are in school at least half time. These loans require your parents to have a decent credit history. There is an annual limit on the amount that can be borrowed, equal to the cost of attending school minus any other aid you're receiving. The interest rate is fixed for this type of loan. For loans disbursed on or after July 1, 2006, the interest rate will fall between 7.94 percent and 8.5 percent, depending on which type of PLUS loan you receive. Your parents will start repaying this loan within 60 days after the loan is disbursed, which means they have to start repaying the loan amount---both principal and interest---while you're still in school. (So think twice before asking them for pizza money.)

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