If you apply for financial aid, you may be offered a loan as part of your school’s financial aid offer. A loan is a money that you borrow and it has to be repaid with interest.
If you decide to take a loan, make sure you understand who is making the loan and the terms and conditions of the loan.
Student loans can come from the federal government, from private sources such as banks or financial institutions, or other organizations.
Loans made by the federal government, called federal student loans, usually have higher returns than loans from banks or other private sources.
Learn more about the difference between federal and private student loans.
What Types of Federal Student Loans Are Available?
The US Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan Program. Under this program, the U.S. The Department of Education is your lender. There are four types of direct loans available:
- Direct subsidized loans are loans given to eligible undergraduate students who demonstrate a financial need to help cover the cost of higher education in college or career school.
- Direct unsubsidized loans are loans given to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.
- Direct PLUS loans are loans given to undergraduate or professional students and parents of dependent graduate students to help pay for education expenses not covered by other financial aid. Eligibility is not based on financial need but does require a credit check. Borrowers with an adverse credit history must meet additional requirements to qualify.
- Direct consolidation loans allow you to combine all of your eligible federal student loans with a loan servicer into one loan.
How Much Money Can I Borrow in Federal Student Loans?
It depends on whether you are a graduate student, a graduate or professional student, or a parent.
- If you’re a graduate student, you can take out a maximum amount of $5,500 to $12,500 per year in direct subsidized loans and direct non-subsidized loans each year, depending on which school you attend. and your dependency status.
- If you are an undergraduate or professional student, you can borrow up to $20,500 each year in direct non-subsidized loans. Direct PLUS Loans can also be used for the remaining costs of your college, as determined by your school, not covered by other financial aid.
- If you are the parent of a dependent graduate student, you can get a Direct PLUS loan for the remaining cost of your child’s college, as determined by his or her school, not covered by other financial aid.
Why should I take out federal student loans?
Federal student loans are an investment in your future. You shouldn’t be afraid to take out federal student loans, but you should be smart about it.
Compared to other options you can consider when paying for college, federal student loans offer several benefits:
- The interest rate on federal student loans is fixed and usually lower than on private loans – and much lower than on credit cards!
- You don’t need a credit check or cosigner to get most federal student loans.
- You don’t have to start paying off your federal student loans until you leave college or are under half-time.
- If you demonstrate financial need, the government pays interest on certain types of loans while you are in school and for certain periods after school.
- If you’re having trouble making payments, federal student loans offer flexible repayment plans and options for deferring your loan payments.
- If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if certain conditions are met.
What Should I Consider When Taking Out Federal Student Loans?
Before taking a loan, it is important to understand that a loan is a legal obligation that makes you liable to repay the amount borrowed along with interest. Even though you don’t need to start paying off your federal student loans right away, you shouldn’t wait to understand your responsibilities as a borrower. Get the Scoop: Watch this video about responsible lending or browse the tips below.
- Keep track of how much you are borrowing. Think about how the amount of your loan will affect your future finances, and how much you can repay. Your student loan payments should only be a small percentage of your salary after you graduate, so it’s important not to borrow more than you need to pay for your school-related expenses.
- Research starting salaries in your area. Ask your school for the starting salaries of recent graduates in your field of study to see how much you can earn after graduation. You can go to the U.S. to research careers and salaries. You can also use the Department of Labor’s Occupational Outlook Handbook or the Career Search Tool.
- Understand the terms of your loan and keep copies of your loan documents. When you sign your promissory note, you agree to repay the loan according to the terms of the note, even if you don’t finish your education, can’t find a job after completing the program, or don’t want to. You have not received an education.
- Pay on time. You must pay on time even if you do not receive bills, repayment notices, or reminders. You must pay the full amount required by your repayment plan, as partial payments do not meet your obligation to pay off your student loans on time.
- Get in touch with your loan servicer. Notify your loan servicer upon graduation; withdraw from school, fall down from the half-time position; transfer to another school; Or change your name, address, or Social Security number. You should also contact your service provider if you are having trouble making your scheduled loan payments. Your lender has several options available to help you keep your loan in good standing.
How do I get federal student loans?
To apply for federal student loans, you must first complete and submit a Free Application for Federal Student Aid (FAFSA®) form. Based on the results of your FAFSA form, your college or career school will send you a financial aid offer, which may include federal student loans. Your school will tell you how to accept all or part of the loan.
Before getting your loan amount, you will need to:
- Full Admission Counseling is a tool to ensure that you understand your obligation to repay the loan; And
- Sign a master promissory note agreeing to the terms of the loan.
Contact your school’s financial aid office for information about the process you plan to attend.
Is the U.S. Is the Department of Education responsible for Health Education Assistance Loan (HEAL) program loans?
Yes. On July 1, 2014, the HEAL program was transferred from the US Department of Health and Human Services (HHS) to the US Department of Education (ED). However, it is no longer possible to obtain a new HEAL program loan. The creation of new HEAL Program loans was discontinued on 30 September 1998.
Borrowers who have HEAL program loans and members of the community can find out more information below.
- If you have HEAL program loans and are not in default on those loans, contact your loan servicer for assistance with account-related questions. Use the contact information provided to you by your loan servicer.
- If you have HEAL program loans and default on those loans, contact the Debt Collection Center for assistance with account questions.
For mail sent through the US Postal Service:
HHS Program Help Center
Accounting Services, Debt Collection Center
Mailstop 10230B
7700 Wisconsin Ave., Suite 8-8110D
Bethesda, MD 20857
For mail sent by UPS or FedEx:
HHS Program Help Center
Accounting Services, Debt Collection Center
Mailstop 7th Floor
7700 Wisconsin Ave., Suite 8-8110D
Bethesda, MD 20814
Phone: 301-492-4664
If you have a general HEAL program question (not a loan account question), contact ED’s HEAL program team at 1-844-509-8957 or HEAL@ed.gov.
What is the Federal Perkins Loan Program?
The federal Perkins Loan Program provides funding for college or career school for students with financial needs. The right to create new Federal Perkins Loans for Schools expired on September 30, 2017.
