Federal student loans are usually preferred over private loans because they have benefits and protections in place like fixed interest rates and income-driven repayment (IDR) plans. A federal loan does not need a credit check or a cosigner, plus you don’t have to start paying the loan back until you finish college or drop out. You can also qualify for subsidized loans based on financial need where the government pays the interest for some loan types while you are in school and during the grace period after school. You’ll only begin paying back the loan six months after graduation. To get a federal student loan:
- You need to first submit a completed Free Application for Federal Student Aid (FAFSA®) which takes about 30 minutes.
- The FAFSA form helps you find out how much financial aid you may qualify for including grants, scholarships, work-study, and federal student loans.
- Your college will send you a financial aid offer based on the information in your FAFSA form.
- You have to cover the gap between the aid and the cost of attendance.
- You will have to also complete entrance counseling which helps you understand your responsibility for loan repayment.
- You will also need to sign a Master Promissory Note (MPN) agreeing to the terms of the loan and repayment.
You can either get a subsidized or unsubsidized loan based on financial need. With subsidized loans, the interest is covered in the subsidy granted. Interest begins to accrue immediately with unsubsidized loans.
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