The federal government provides loans to help fund each individual’s education.  These loans must be paid back, unlike scholarships or grants, with interest.  However, these loans have low interest rates, as well as prolonged repayment terms and different modes of deferment.  Many people apply for federal financial aid as a main source of financial assistance.  The FAFSA is the federal document that will determine how much aid you qualify for based on your personal assets, and must be filled out in order to receive financial aid.  Two popular federal student loans are the Federal Stafford Loan and the Federal Perkins Loans.

Stafford Loan - Either subsidized (interest is paid by the government while you are in school) or unsubsidized (you pay all the interest, which can be deferred):

  • To be eligible for a subsidized Stafford loan, you must demonstrate financial need.
  • All students are eligible for the unsubsidized Stafford loan, no matter the level of his or her need.
  • If you choose to defer the payments until after graduation, the interest will be added onto the final loan balance, which will in turn increase your final payment.
  • The standard term for repaying a Stafford loan is 10 years.
  • You must submit the FAFSA to apply for a Stafford loan. Consider seeking outside financial aid consultants to help with all of your financial aid applications.

Perkins Loan

  • Those who qualify for the Perkins loan must show extensive financial need.
  • In this case, the school pulls a designated amount of money from the federal government and acts as the lender.
  • This is a subsidized loan where the interest is paid by the government, and has the same 10 year repayment term as the Stafford loan.

When applying for federal aid, it is important to be aware of all your options.  Filling out the FAFSA accurately and as soon as possible will also increase the amount of federal assistance you receive, as financial aid tends to follow a “first come, first serve” motto.  Errors made on the FAFSA document can end up costing you hefty amounts of financial assistance that would have been available to you.  Practice FAFSA documents are available online for you to fill out in preparation for the real thing.  If the entirety of the process seems to be weighing you down, you can always work with a financial aid consultant, who will help guide you through the steps to getting financial aid and make sure you are not missing out on any additional funding.

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