Federal Student Loan

Federal Student Loan Basics

The quest for financial aid to help with college expenses can be time consuming and confusing.  With a little bit of research and education, though, you can be much better prepared to start the search process.  The first type of financial aid you should learn about is the federal student loan.

What Is A Federal Student Loan?

The federal government administers an extensive array of student aid programs.  Some of these are grant programs, but most are student loan programs.  The specifics of these programs varies from one to the other, but the common underlying characteristic is that the government uses its resources to help students obtain loans to help pay for college expenses.

Who Lends The Money?

When you receive a federal student loan, the money may actually come from several different sources.  In some cases the government lends its own money, while in other cases it partners with other lenders who provide the money.  The government’s role is to provide incentives for the outside lenders to keep interest rates low and maintain flexible repayment plans.  In some cases the government will pay the interest charges on the loan while the recipient is still in school, instead of those charges being added to the repayment schedule that begins when school enrollment ends.  This is called a subsidized loan.

How Do I Get A Federal Student Loan?

You start the federal student loan process by completing the standardized application, which can be done online.  The information on the form is used to evaluate your financial need at determine the types and amount of federal aid you are eligible to receive.  The college or university you plan to attend also uses this form to determine if you are eligible for state aid or other aid specific to that school.  This is why it is so important to fill out the form, even if you think you aren’t eligible for federal assistance.