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The 3 Most Popular Federal Student Loan Programs

Federal Student Loan Programs

Education is a key for a prosperous life and a brighter future. However, today, to get high-quality education services, you are required to have enough saving or investment. Unfortunately, some people are not able to gain access to the top education programs due to high prices. That is why many people come up with an idea of applying for student loan programs. The US Government offer comprehensive lists of different student loan programs that allow you to get any kind of higher education services including degree programs. In addition to Federal Student Loan programs, you can also find a wide range of private student loan programs offered by credit unions, banks or other types of lenders. There various types of Federal Student Loan Programs provided by the US Government.

In this article, we are going to choose three of Federal Student Loan Programs which are the most popular ones around the nation. We will guide you on how to apply for these programs, who are eligible and we will provide some tips for the application procedures.

The William D. Ford Federal Direct Loan Program

Federal Student Loan Programs

The first and most well-known Federal Student Loan Program is The William D. Ford Loan Program. This type of Federal Student Loan program is created and operated by the US Department of Education, and this is only a loan program which entirely backed by the US Government. William D. Ford Federal Direct Loan program offers long term student loans with low-interest rates which are intended for postsecondary students and their parents. All the student loans that the Federal Direct Loan program provides is completely guaranteed which means that eligibility doesn’t depend on your income and credit score. Federal Direct Loan program is divided into three different directions and works through the following programs:

Direct Subsidized Loans 

This type of loan offered by the Direct Loan Program allows you to borrow money and do not accrue interest during the time you have been enrolled in school. This loan deferred after you graduate. To be eligible for Direct Subsidized Loans, you are not required to have a credit score or any level of income. It is because the Federal Government determines the interest rates on Direct Subsidized Loans and these rates are fixed. On the other hand, you should keep in mind that the amount of credit you can take out is limited. All you are going to need is to complete the application form of FAFSA.

Direct Unsubsidized Loans

Federal Student Loan Programs


When we come to Unsubsidized Direct Loans, things are different a little bit. The main difference between Direct Subsidized Loans is that Uncle Sam does not act so generously. So when you take the credit through the Unsubsidized Direct Loans, you are responsible for making repayment on interest from the date you borrowed. For example, let us say you borrowed $1000 for your education, after four years, at the end of your school you are responsible for $1300 thanks to the accrued interests. Direct Unsubsidized Loans are considered the general type of Federal Direct Loan, that is why the Government does not pay any interest on them. The borrower is entirely responsible for paying all amount of the debt including interest and principle.

PLUS Loan 

Another type of Federal Direct Loan under the William D. Ford Act is PLUS (Parent Loan for Undergraduate Students) loan. This loan program is intended for assisting undergraduate students and parents of dependent students in covering their educational expenses. PLUS loan works simply so parents of dependent students could borrow money on behalf of the students. There are no strict requirements to be eligible for the PLUS loan program. Thus, all you are going to need is to be enrolled at least half-time, and your parent has to pass a regular credit check. If you have already graduated or you are a professional degree student who is enrolled at least half-time at available school, you can apply for PLUS loan in the purpose of your academic study.

Direct Consolidation Loan

As a part of the Federal Direct Loan Program, Direct Consolidation Loan gives the student or parent the opportunity to borrow directly from the US Department of Education. Before applying for the Direct Consolidation Loan, it is significant to evaluate and compare the benefit of the original loan. Mainly, you have to pay close attention to interest rates and rebates because they are the main parameters that show you which choice would be beneficial for you. Additionally, you should take into account that the Direct Consolidation Loan will increase the length of payment. That is why the interest rate on overall loan debt is rising even though monthly payments are lower than standard payments.

Federal Perkin Loans

Federal Student Loan Programs

Another famous student loan program is Federal Perkin Loans which is intended to assist the student who has severe financial need. This program provides the loan with a lower monthly payment. It worth to note that the amount of money you can borrow through the Federal Perkin Loan program differs. Depending on whether you are graduate or undergraduate students, the program has limited interval on the credits. So for undergraduate students, the limit is up to  $5.500 for each year while the cumulative limit is $27.500 for entire education year. On the other hand, for the graduate student, the program offers $8000 for each year, but cumulative $60000 for the whole educational period. Perkin loan program charge 5% interest rates on these loans.

Federal Stafford loans

Another type of Federal Student Loan Programs is Stafford Loans. What makes this program so popular is the flexible options for eligibility. So, unlikely Federal Perkin loan, this program provide credit no matter what your financial need is. Also, both graduate and undergraduate students could apply for this loan. The maximum amount of credit the Federal Stafford loans offer depends on two main factors. First,  which year of education period you are, second whether you are financially dependent on your parent or not. The conditions of Stafford loans for the maximum borrowing limit is like the following:

  • At the first year of education, $5.500 for a dependent, $9.500 for independent students
  • At the second year, $6.500 for a dependent, $10.500 for independent students
  • For Junior year and the next period, $7.500 for the dependent, $12.500 for independent students.

It worth to note that, for graduate or professional degree students, Stafford loan program provides $20.500 credit amount for each year. For these students being dependent or independent is not considered.

For the credits which were taken after the date 1 June 2017, current interest rates for Federal Stafford loan is 4.45%.

Final note

By taking all said into consideration, Federal Student Loan Programs offer a list of excellent options to continue your education. Remember, any amount you spend on education is not your expense but an investment. That is why, if you are looking for finance for your school, those  Federal Student Loan Programs listed above could be a perfect source for your funds. If you think you are not eligible for any of these programs, to learn more about other types of Federal Student Loan Programs, you can take a look at the Student Loan Resolved website.