Federal Student Loans

Federal Student Loans

A federal student loan is a loan funded by the federal government to help pay for your education. It is borrowed money you must repay with interest. 

If you apply for financial aid, you may be offered loans as part of your school’s financial aid offer. The FAFSA is necessary to get any form of federal student aid including loans and work-study grants. Students will need to apply each year online at www.fafsa.ed.gov, which provides loans for almost all two- and four-year colleges, universities, and career schools in the country.

Remember that not everyone who applies receives aid. Grants and loan packages are awarded according to your income and the tuition of the school you're applying to.

You can estimate how much aid you might be eligible for by using the federal government's Student Aid Eligibility calculator.

The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan) Program. Under this program, the U.S. Department of Education is your lender.

Federal loans are provided by the Direct Loan Program, which is funded by the government and serviced by private entities like Navient, Nelnet, and others. Be sure you understand your repayment responsibilities before accepting financial aid. If it's a grant, it doesn't have to be repaid. Loans do have to be repaid with interest upon graduation.

Federal student loans offer many benefits compared to other options you may consider when paying for college:

  • The interest rate on federal student loans is fixed and usually lower than that on private loans—and much lower than that on a credit card.
  • You don’t need a credit check or a cosigner to get most federal student loans.
  • You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.
  • If you demonstrate financial need, the government pays the interest on some loan types while you are in school and during some periods after school.
  • Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.
  • If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.

Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it. For more information on the different types of federal student loans visit studentaid.gov/loans.

The content on this page provides general consumer information. It is not legal advice or regulatory guidance. We do not endorse or guarantee the accuracy of third-party information.

Members' Voice Testimonials

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