Student loans can come from the federal government or from private sources such as a bank or financial institution. Loans made by the federal government usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources.
If you decide to take out a student loan, make sure you understand who is making the loan, as well as the terms and conditions of the loan. Review our Federal Student Aid Summary to familiarize yourself with the various options that may be available to you. If you are interested in applying for a federal student loan, you must first submit a Free Application for Federal Student Aid (FAFSA).
The U.S. Department of Education has two federal student loan programs: the William D. Ford Federal Direct Loan Program, and the Federal Perkins Loan Program.
The William D. Ford Federal Direct Loan Program is the largest federal student loan program. Under this program, the U.S. Department of Education is your lender. There are four types of Federal Direct Loans available:
NOTE: Interest rates for federal direct subsidized and unsubsidized loans disbursed between July 1, 2013 and June 30, 2014 are at 6.8% for both undergrad and graduate students.
The Federal Perkins Loan Program is a school-based, low-interest loan program for undergraduates and graduate students with exceptional financial need. Under this program, the school is lender. Below is a quick overview of this lending option:
If you are an undergrad, you may be eligible to receive up to $5,500 a year. The total you can borrow as an undergrad is $27,500. If you are a graduate or professional student, you may be eligible to receive up to $8,000 per year. The total you can borrow as a graduate student is $60,000, which includes amounts borrowed as an undergrad.