Federal Loan Programs


America is a melting pot in which individuals from various races and ethnicities come together to form our great country. While we all have our own customs, traditions and problems, one commonality unites us all: We borrow a considerable amount of money for college! One way to borrow for college is through federal loans that are offered to families that complete the Free Application for Federal Student Aid or (FAFSA).

Let’s review the terms and different options that make up our federal loan program:

We begin with student loans and regardless of one’s income level, the Stafford Student Loan is available to all student’s that complete the FAFSA. Stafford Loans are in the student’s name, do not require a co-signer and can be either subsidized (meaning the interest is paid by the government while in school), unsubsidized (meaning the student is responsible for the interest) or a combination of both.

Stafford Loans currently have a 4.66% interest for both subsidized and unsubsidized loans. The FAFSA process must take place each year and currently students can borrow a total of $5,500 per year as freshmen, $6,500 per year as sophomores and $7,500 per year as juniors and seniors. It is also important to note that not all students are eligible for subsidized loans as the family’s financial picture is taken into account.

The other student loan option is the Perkins Loan, which has a 5% interest loan for families that demonstrate considerable financial need. The maximum amount per year that can be awarded in a Perkins Loan is $5,500. Both Perkins and Stafford Loans are interest deductible until six months after graduation.
These are the only two federal student loan options.

The Parent Plus Loan is the only federal parent loan option. These loans can cover up to the total yearly cost of college minus any need-based aid that is awarded. However, Parent Plus Loans are unsubsidized with a 7.21% interest rate that continues to rise each year.