Federal Student Loans
Federal student loans can be a confusing topic. Here is a quick overview. There are many different types of federal loans, although, not all are necessarily geared towards graduate students. These loan types are offered through two programs:
William D. Ford Federal Direct Loan Program
Loans are borrowed directly from the government via the institution being attended.
Federal Family Education Loan Program
Federally guaranteed loans are borrowed from private lenders via the institution being attended. Also known as FFEL.
The loans offered through these programs can be subsidized or unsubsidized. Subsidized federal loans are given according to financial need. Subsidized loans are so beneficial because the government will pay the interest on the loan during school, six months after graduation, and even during times of payment deferment. On the other hand, unsubsidized loans require the borrower to pay interest from the inception of the loan; there is also an option to let the interest accrue.
As mentioned, there are many types of Federal student loans. A few are:
Federal Stafford Loan
These loans are offered through both Direct Loan and FFEL, and can be subsidized or unsubsidized. For an unsubsidized Stafford loan, the principal will be deferred during school, however, the borrower is responsible for the interest either during school or after by way of the accrual method. The Stafford Loan application is the FAFSA.
Federal Plus Loan
These loans, offered through Direct Loan and FFEL, are available to parents of dependent undergraduates as well as graduate students. These loans are unsubsidized. The principal will be deferred, however, the borrower is responsible for interest. The Federal Plus Loan application is the FAFSA.
Federal Perkins Loan
Federal Perkins student loans are low interest loans given on a need basis. The Federal Perkins Loan application is the FAFSA.
It is very important to note that educational institutions do not necessarily offer all these and other federal student loan options. The Free Application for Federal Student Aid (FAFSA) is the method to apply for federal loans. This process can be done online. Click here for the FAFSA. This link leads to the Federal Student Aid site where you can apply for federal loans as well as find information on qualifying criteria and loan rates.