Federal Student Loan Guide

Find Some of the Best College Loans Available

Whether you’re a recent high school graduate, an associate degree holder looking to gain your bachelor’s, or a graduate student looking to gain a doctorate, you’re likely going to need at least some financial assistance to pay for your new degree. According to The College Board, the cost of a public, four-year college in the year 2000 was $12,440/yearand the cost of the same institution in 2020 will be $21,950/year. That kind of increase in cost has driven an equivalent increase in borrowing and, while it’s be best to avoid debt in general, ignoring the possible benefits provided by a college education just isn’t an option for most. Luckily, the government provides some excellent options for those looking to finance their degrees.

Student Loans Center


What are Government Loans?

‘Government loans’is just another term for federal students loans. These loans are provided by the federal government in the hopes that more Americans will be able to use them to afford college. The first federal student loan program, started in 1958,required that government funds be matched by the student’s educational institution. However, these days, loans are provided without that caveat, as well as without the requirement of a credit check, excessive fees, or many of the other issues associated with private student loans. If you’re looking to cover your tuition and scholarships and grants just aren’t going to cut it, this should be your first stop in your search for loans to put toward your education.

Types of Federal Student Loans


Direct Subsidized Loans

Subsidized loans are made to students who demonstrate a certain level of financial need. Direct subsidized loans are a type of federal student aid that defers payments and interest on the funds until you are out of school. That is, the government will pay the interest on your loan while you are actively enrolled as a part-time or full-time student, and for the first six months after graduation. You can also defer payments on a subsidized loan if you are experiencing a period of financial difficulty. For example, you may need time to land your perfect first job, so you can defer while in this bridge period.

Direct Unsubsidized Loans

Direct unsubsidized loans are federal student funds provided regardless of financial need. Your school will determine how much you can borrow, much like a subsidized loan. However, your loan will start to accrue interest immediately.

These loans are good if you who come from an affluent background, yet still need to take out credit to cover your tuition or other educational costs. They might also be a good choice if you are a working professional with adequate means, but yet you don't wish to pay your complete tuition in cash. If your employer offers tuition reimbursement based on end of term grades, or some other repayment plan, an unsubsidized loan might be a way to cover costs upfront until your employer cuts the check.

Direct PLUS Loans

There are two general types of Direct Plus Loans: those for students who are pursuing graduate or professional degrees and those for the parents of undergraduate students who need more funds to finish a degree. Graduate students take Grad PLUS Loans at a fixed interest rate in order to subsidize their graduate or professional degree programs.

Parent PLUS Loans are often frowned upon, but the federal government offers them as a way for parents to complete the funding for their child's education. These loans do not have any sort of grace period or special repayment plans. In fact, you must start paying the loan back as soon as the loan disburses into your child's student account.

Repayment Plans & Options


  • Standard Repayment Plan:
    The standard repayment plan for student loans creates a payment schedule that is designed to ensure that you pay off your loans in ten years. All federal student loans are eligible for this repayment plan: Direct subsidized and unsubsidized loans, Federal Stafford Loans, PLUS loans, and all consolidation loans.
  • Graduated Repayment Plan:
    This option allows you to start repaying your loans with lower payments that increase every two years or so, until you complete the repayment. It should take you approximately ten years to repay your student loans using this method. If you are repaying consolidation loans, your repayment period may extend up to thirty years.
  • Extended Repayment Plan:
    Direct and Federal Family Education Loan (FFEL) borrowers who owe more than $30,000 may take this repayment option. This method provides for lower payments than under the Standard Repayment Plan option, but you will pay more over time. You may choose between fixed or graduated payments that are structured to accommodate a 25-year repayment period.
  • PAYE and REPAYE Repayment Plans:
    This individualized repayment plan is geared to your income and family debt load to ensure that you are able to meet your payments. The REPAYE system is available for any borrower, allows up to 25 years for repayment, and does not require a high debt-to-income ratio. The PAYE plan requires a high debt-to-income ratio and only allows for a 20-year repayment plan. Both PAYE and REPAYE repayment plans forgive any outstanding debt after their prescribed periods expire.
  • Income-Based Repayment Plan:
    This sort of repayment plan is based on your income. Your monthly payments will be either 10 or 15 percent of your discretionary income but will never exceed any payment you might have made under the Standard Repayment Plan. To qualify for this plan, you must have a high debt-to-income ratio and any remaining debt will be forgiven after 20 or 25 years, depending on the loan origination date. Note that the IRS may consider your forgiven debt as income.