Information about Federal Student Loans in the United States

Education is integral part of our life these days, especially with the rapid development of modernization and industrialization. However, not everyone in this world are lucky enough to taste higher education due to financial constraints. To help them, many organization, both federal and private, provide student loans. Student loans are basically borrowed money which have to be repaid in a period of time. Most of them have interest. There are many times where the amount of money students must repay will surpass the amount of money they borrow. There are a lot of parties that offer student loans, such as non-bank and banks financial institutions, state governments, and federal government. The fees and interest rates for each loan are different based on the lender. In this article, we will explain more about federal student loans in United States.

The Department of Education of United Stated offers some fixed rate and low-cost federal student loans to support graduate students, undergraduate students and their parents financing college education. There are many types of student loans offered by Department of Education. One of them is direct loan program, which consists of Direct Consolidation Loans, Grad PLUS Loans, Parent PLUS Loans, Direct Unsubsidized Loans, and Direct Subsidized Loans. To enroll to these student loans program, a student must submit Free Application for Federal Student Aid or FAFSA and is an active member of an eligible university or college. A student should also complete counseling for loan and sign an MPN or Master Promissory Note before the loans finally given. The complete eligibility requirements for Direct Loans are listed below:

  • Fulfill the general eligibility requirements
  • Currently not receiving any student loans
  • Registered in a certificate program or eligible degree at least half time
  • Have a high school diploma
  • US national, citizen, or eligible non-citizen

Direct Loans has fixed interest rates. For 2017 to 2018 academic year, the interest rate for graduate students is 6% while undergraduate students is 4.45%.

To choose the best student loan, there are things that you need to understand before deciding to get private or federal student loans. First, the interest rate. Make sure to choose the one with lowest interest fixed rate. The variable interest rate may look cheaper, but it will gradually increase, thus creating more burden to your loan. Next, you may apply for loan forgiveness because it cancels either part of all of your debt, thus reducing the loan’s cost.