Dimes for diplomas: The lowdown on federal student loans

With college tuition fees ballooning each year, it’s not uncommon to fret over school expenses. Luckily, America takes pride in being “the land of opportunity,” and the federal government grants loans specifically for this purpose.

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The following are the types of federal college loans offered by the US government:

Direct subsidized and unsubsidized loans are based on a student’s standing in college. In direct subsidized loans, the government pays the interest while the student is in school and for the first six months upon graduating. Direct unsubsidized loans, meanwhile, require no proof of financial need, but the student shoulders the interest while in school. Though payments are deferrable for both, interest accrued gets added to the principal balance.

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Direct PLUS Loans are for graduate or professional degree students or to parents borrowing on behalf of their undergraduate children. These loans have a fixed interest rate, and students or parents who meet certain requirements via the Free Application for Federal Student Aid form and who have good credit history are eligible.

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Perkins Loans, a program between the government and participating schools, are available to undergraduate, graduate, and professional students with exceptional financial need. The school is the lender here, and the amount borrowable is determined by both the student’s financial needs and the school’s available funds.

Michael Lewis, Haskell Indian Nations University’s CFO, has 20 years of experience in financial planning and has worked with the Oklahoma Air Logistics Center and the US Marshall’s Service in Kansas City. More information about him can be found here.