{"id":30312,"date":"2019-02-15T11:16:27","date_gmt":"2019-02-15T16:16:27","guid":{"rendered":"https:\/\/www.tun.com\/blog\/?p=30312"},"modified":"2025-08-04T17:59:04","modified_gmt":"2025-08-04T21:59:04","slug":"what-are-federal-student-loans","status":"publish","type":"post","link":"https:\/\/www.tun.com\/blog\/what-are-federal-student-loans\/","title":{"rendered":"What Are Federal Student Loans? All You Need to Know"},"content":{"rendered":"\n

When it comes to college education in the United States, the numbers are astounding (and not in a good way). The total student debt has reached a high of $1.7 trillion<\/a>, with the average undergrad borrowing about $30,000<\/a>. <\/p>\n\n\n\n

Unfortunately, most students do not know how to manage their student debt successfully because they haven\u2019t been given adequate financial education<\/a> to help them do so.<\/p>\n\n\n\n

So, if you need to borrow money for school (like I did), be smart about it. <\/p>\n\n\n\n

First, explore all the free money available to you — grants<\/a> and scholarships<\/a> — as well as  work-study<\/a> programs available at your school and part-time jobs<\/em> that will accommodate your school commitments.<\/p>\n\n\n\n

Next, if you still need it, check out federal student loans<\/a> that are issued by the U.S. Department of Education.<\/p>\n\n\n\n

Here\u2019s what you need to know about federal student loans:<\/p>\n\n\n\n

1. What types of federal student loans are available?<\/strong><\/h2>\n\n\n\n

Currently, four types of federal student loans are available through the William D. Ford Federal Direct Loan Program (Direct Loans)<\/a>. <\/p>\n\n\n\n

The Department of Education is your lender, but the loans are serviced by loan servicing organizations or companies assigned to help the government manage the billing and other services for your loan. You could have more than one servicer if you have multiple federal student loans.<\/p>\n\n\n\n

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  1. Direct Subsidized Loans<\/strong><\/a>: These loans are available only to undergraduate<\/em> students with financial need. The Department of Education pays the interest while: (a) you\u2019re in school at least half-time; (b) you\u2019re in grace period (first 6 months after graduation); and you\u2019re in deferment (you have chosen to postpone your loan repayment). <\/li>\n\n\n\n
  2. Direct Unsubsidized Loans<\/strong><\/a>: These loans are available to undergraduate, graduate and professional<\/em> students, and there is no need to demonstrate financial need. Unlike \u201csubsidized\u201d loans, you have to pay the interest on unsubsidized loans even when you\u2019re in school, in grace period, or in deferment. Since interest accrues, you should pay the interest if you can afford it during those periods. If you can\u2019t, accrued interest will be added to your principal and you will have a larger overall amount to pay back.<\/li>\n\n\n\n
  3. Direct PLUS Loans<\/strong><\/a>: These are available to parents of dependent undergraduate<\/em> students (Parent PLUS<\/a>) and graduate or professional<\/em> students (Grad PLUS<\/a>). While there is no need to demonstrate financial need, borrowers have to undergo a credit check and must not have an adverse credit history. But, if you have an adverse credit history, don\u2019t lose heart. You may still qualify under certain circumstances (explained below).<\/li>\n\n\n\n
  4. Direct Consolidation Loans<\/strong><\/a>: These loans combine your eligible federal student loans into a single loan, so you have one payment to make and one single loan servicer to deal with. The loans to be consolidated must be in repayment or in grace period.<\/li>\n<\/ol>\n\n\n\n

    2. Are you eligible for Direct Loans?<\/strong><\/h2>\n\n\n\n

    To qualify, you must meet ALL<\/em> of the following requirements<\/a>:<\/p>\n\n\n\n

    First<\/strong>, you have to show financial need<\/em>, which will be assessed based on the data you provide on your Free Application for Federal Student Aid (FAFSA)<\/a>, if you want to borrow Direct Subsidized Loans<\/em>. <\/p>\n\n\n\n

    Second,<\/strong> you must <\/strong>be a U.S. citizen or U.S. national<\/em>, or fall under one of the following categories of eligible noncitizen<\/em>s who have:<\/p>\n\n\n\n