Student Loans Offered by the Government

Student loans provided by the government, or federal loans, offer the most lucrative financial assistance for a college student.

These loans are divided into two types: student loans, or parent loans. Student loans are borrowed directly by the student, whereas "parent loans" are student loans designed to be paid off by the parent(s) of the student in question.

Stafford Loan

This is the loan most commonly utilized by college students. A Federal Direct Student Loan Program, or FDSLP, is provided directly by the government, whereas a Federal Family Education Loan Program, or FFELP, is provided by banks and lenders and protected from default by the government. Both are Stafford Loans.

Stafford Loans are either:

• Subsidized; the government pays the interest while you are in school, and you do not have to pay the loan back until six months after you finish school.
• Unsubsidized; you accrue interest while in school, but you still do not have to pay the loan back until six months after you finish school.

Subsidized Stafford Loans require you demonstrate financial need. Typically, 2/3 of these loans are awarded to students with a combined total family income of $50,000 or less a year. All students, regardless of need, may apply for the unsubsidized Stafford Loan.

The standard repayment term for these loans is ten years.

Perkins Loan

This is a loan awarded to students with exceptional financial need. The Perkins Loan is a campus-based loan program, with the school acting as the lender with a pool of limited funds provided by the government. This loan provides the best interest rate, repayment plan, and grace period.

PLUS Loan

The PLUS Loan, or Parent Loan for Undergraduate Students, is the parent loan available federally. The parent may use this loan to cover any costs of school not covered by the student's available loans, up to the maximum cost of tuition. These also come in the form of FFELP and FDSLP loans. For parents with multiple children attending college, their PLUS Loans can be consolidated.