Government Student Loans
When starting college and looking for a loan, the first place you should go to is the government. Government student loans offer a lot of value beyond what standard personal loans do such as low interest rates and flexible payment options.
What makes government student loans different?
A standard loan usually requires a credit check and can be used for a small business start-up or other type of expense. Government student loans have different requirements. It must be used for a 2 or 4 year public or private college, university, or trade school. These loans are offered by the Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDLP).
What government student loans are available?
The Stafford loan is the most common government student loan. It is offered either subsidized or unsubsidized. Students in financial need may qualify for a Stafford loan that is subsidized by the government. This means the government pays the interest until six months after they graduate. This can be a huge help to someone who can’t afford a regular loan.
Unsubsidized Stafford loans are available to anyone, regardless of financial need. They are unsubsidized meaning the government doesn’t give you any help paying the interest.
There is a limit on how much you can borrow from the government:
- Freshmen year maximum – $3,500
- Sophomore year maximum – $4,500
- Junior and Senior year maximums each – $5,500
If you need further funding, there are other government loans:
Perkins Loan – up to $4,000 a year and $20,000 total maximum
Parent PLUS Loan – offered to parents of students for a higher interest rate by you can take out more money
Graduate Plus Loan – similar to the Parent PLUS Loan but offered to graduate students