When it comes to handling the cost of higher education, it is important to know what options are out there. While there are private student loans, many people turn to federal student loans instead! These loans are popular because they typically come with more benefits compared to private alternatives.
What Types of Federal Student Loans are There?
Not every federal student loan can provide the same opportunity! That is why it is important to know the difference.
The United States Department of Education (ED) specifies four types of Direct Loans which are:
Subsidized Loans
Unsubsidized Loans
PLUS Loans
Consolidation Loans
Direct Subsidized Loans
These loans are only available to undergraduate students that qualify. Specifically, they focus on helping students who can demonstrate financial need. Those that are not in financial need will not qualify for this opportunity.
Direct Unsubsidized Loans
This is a loan opportunity for qualifying undergraduate, graduate, and professional students. A benefit of this loan opportunity is the fact that it doesn’t rely on financial need as qualifying criteria.
Direct PLUS Loans
There are Direct Parent Plus Loans or Direct Student Plus Loans. These loans can help either graduate students, professional students, or the parents of dependent undergraduate students. The funds from these loans can help recipients handle education expenses that are not covered by other forms of financial aid. With these loans, while financial need does not play into eligibility, a credit check will. Those that don’t have the best credit history will need to meet additional qualifications to be eligible.
Direct Consolidation Loans
Last but not least on the list of federal student loans are Direct Consolidation Loans. These loans give borrowers the chance to combine all qualifying federal student loans into one single loan with one loan servicer. This helps with the management of these types of loans!