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All About Federal Student Loans

There are several different types of federal student loans that you can apply for, all with low interest rates and fees, and some with zero fees. These government backed loans are a great way to borrow money for your education at a low interest rate, and you should check them out before turning to private loans and other pricier financing options, like using a credit card to pay your college expenses.

To qualify for federal student loans, you must meet the following requirements:

  • You must be a U.S. citizen or eligible non-citizen.

  • You need a valid social security number.

  • If you're a male between ages 18 and 25, you need to be registered with the Selective Service.

  • You must qualify to begin your post-secondary education, generally by obtaining a high school diploma or GED. ┬áThis is by far the most common and easiest way to qualify, and is a basic requirement for admission to most colleges.

Check out the chart below for more detailed information on the different types of federal student loans:

Federal Student Loan Types

Type Undergrad
Grad
Amount Interest Rate Fees Terms
Perkins Loan Both undergrad and grad students qualify $5,500 per year of undergrad study (with a maximum of $27,500 total)/$8,000 per year of grad study (with a maximum of $60,000 total, including undergrad studies) Fixed at 5% No fees or charges, unless you skip a payment, make a late payment, or pay less than the full payment amount 9 month grace period - You have 9 months after you graduate, leave school, or drop below half-time attendance to begin payback.
Direct Subsidized Stafford Loan Both undergrad and grad students qualify This amount differs per year enrolled in your program, whether you are at the grad or undergrad level, and whether or not you are dependent on your parents. See the chart below for additional information. Undergrad: The current interest rate for loans if you're receiving your first payment between July 1, 2011 and June 30, 2012 is fixed at 3.4%. Grad: The interest rate is fixed at 6.8%. There is a loan fee of 1% for all loans that have a first payout on or after July 1, 2010. This fee is deducted proportionally with each disbursement. 6 month grace period - You have 6 months after you graduate, leave school, or drop below half-time attendance to begin payback. Generally you'll have anywhere between 10 and 25 years to pay back your loan, depending on the repayment plan you chose.
Direct Unsubsidized Stafford Loan Both undergrad and grad students qualify This amount differs per year enrolled in your program, whether you are at the grad or undergrad level, and whether or not you are dependent on your parents. See the chart below for additional information. Fixed at 3.4% There is a loan fee of 1% for all loans that have a first payout on or after July 1, 2010. This fee is deducted proportionally with each disbursement. 6 month grace period - You have 6 months after you graduate, leave school, or drop below half-time attendance to begin payback. Generally you'll have anywhere between 10 and 25 years to pay back your loan, depending on the repayment plan you chose.
Direct PLUS (Student) Grad and professional degree candidates qualify The maximum is the cost of attendance for your school, after subtracting any other financial aid you'll be receiving. Fixed at 7.9% There is a loan fee of 4%, deducted proporationally with each disbursement. 60 day grace period - Your first payment is due 60 days after your final disbursement. However you have the option to defer repayment as long as you are enrolled in school at least half time and for a grace period of 6 months thereafter. Generally you'll have between 10 and 25 years to pay back your loan, depending on the repayment plan you chose.
Direct PLUS (Parent) Student must be a dependant The maximum is the cost of attendance for your school, after subtracting any other financial aid you'll be receiving. Fixed at 7.9% There is a loan fee of 4%, deducted proporationally with each disbursement. 60 day grace period - Your first payment is due 60 days after your final disbursement. However you have the option to defer repayment as long as you are enrolled in school at least half time and for a grace period of 6 months thereafter. Generally you'll have between 10 and 25 years to pay back your loan, depending on the repayment plan you chose.