Updated: Aug 27, 2024
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The federal government offers several types of student loans to help students and parents pay for college. If you’re eligible, federal student loans will be awarded to you as part of your financial aid package once you complete the FAFSA (Free Application for Federal Student Aid). Here’s a closer look at federal student loans.
The different types of federal student loans are:
Direct Loans are the most well-known with two different types:
Both types of Direct Loans have fixed interest rates and origination fees. There are also limits to how much you can borrow, both annually and in total.
Direct PLUS Loans are available to parents of dependent undergraduate students and to graduate or professional students to help cover up to the full cost of education, less any other financial aid. A credit check is required for this loan type. But even if you have adverse credit history, you still may be able to receive a PLUS loan if you meet additional requirements. You must fill out an application for a PLUS loan in addition to completing the FAFSA.
Direct PLUS Loans have fixed interest rates and origination fees. The maximum amount you can borrow is the cost of attendance minus any other aid.
Once you are in the grace period or in repayment for your federal student loans, you have the option to consolidate. Consolidation allows you to combine multiple federal student loans into one loan so that you have a single monthly payment. Consolidation may affect your current interest rate, repayment period, total cost of the loan, and other loan factors. Visit the federal government’s Direct Consolidation Loan Application for more information.
Annual loan limits for Direct Loans depend on the loan type, your year in school, and whether you are a dependent or independent student. Generally, as you continue your education, you are able to borrow more. For Direct PLUS Loans, the maximum amount you can borrow each year is the cost of attendance minus any other aid.
Federal student loans have certain features to consider. They include:
All federal student loans have specific terms unique to them. Reading the fine print, asking questions, and making an informed decision can help you choose the right loan for you.
Here’s a look at the application process for federal student loans:
FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.
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