How to Apply for Federal Student Loans

Federal Student Loans

Student loans are a form of financial aid provided by the federal government or other private bodies like banks or other financial institutions, a school, or other benevolent organizations. Generally, federal student loans given by the federal government have more benefits than the loans given by banks or other private bodies. So when you want to apply for student loans, you should go for federal student loans rather than private student loans. We will be discussing how to apply for federal student loans in this article.

Federal Student Loans

Federal Student loans are loans given to college students by the federal government. It is different from grants as such it will be repaid with little interest.

Types of Federal Loan

There are basically four federal loans. They include:

  • Direct subsidized loans: They are available to undergraduate students only. Before undergraduates can be eligible, there has to be a need for financial aid to cover the costs of education at a career school or college.
  • Direct unsubsidized loans: These are available for undergraduates, graduates, or professional students. There mustn’t be a need for financial aid before applicants can be eligible.
  • Direct PLUS loans: They are exclusively for graduates, professional students, or parents of undergraduates to help cover college costs that other sources of financial aid can’t take care of. A credit check, rather than a need for financial aid, is what is used to determine eligibility. If you have a bad credit history, you will have to meet other added requirements to become eligible for this loan.
  • Direct consolidation loans: This grants you the option of combining all your federal loans from different periods into a single loan from a single loan servicer.

Loan Limit on Federal Loan

The loan limit on your federal loans is dependent on if you are an undergraduate, a graduate, a professional student, or a parent taking a loan on behalf of your child or ward. These limits are categorized as follows:

  • As an undergraduate, the maximum amount of money you can take as a loan each year under direct subsidized loans and direct unsubsidized loans ranges from between $5,500 and $12,500 each year depending on the level you are in school and if you are dependent on your parents or not.
  • If you have graduated or you are a professional student, the maximum amount you can borrow is $20,500 per year in Direct Unsubsidized Loans. You can choose to take Direct PLUS loans to take care of costs not covered by other financial aids for the remainder of your college years. The amount you can borrow as Direct PLUS loans will be determined by your school.
  • You can receive Direct PLUS loans if you are the parent of a dependent undergraduate student in college for the costs of the years your child still has before he/she finishes college. This amount should be what other financial aid failed to cover and it is also determined by your child’s school.

Advantages of Federal Loans

Federal loans are kind of like an investment in your future, or a reverse investment (if there’s something like that) because you would be repaying it instead of getting money from it but that shouldn’t make you scared of taking a federal student loan, instead just be smart when you do.

Federal student loans hold several benefits over private loans from different financial bodies. If you are going to get a student loan, you should get a federal student loan because:

  • Federal student loans have a fixed interest rate, unlike private loans whose interest rate might increase over time. Also, the interest rate on federal loans is usually lower than those of private loans especially credit card loans which are usually quite high.
  • You don’t need to get a cosigner or a credit check before you can be eligible to benefit from federal student loans, unlike private loans.
  • Repayment of federal student loans only becomes mandatory after you have graduated from college or drop below half time (less than 6 credits as an undergraduates and less than 5 credits as a graduate) enrolment.

Also Read: How Students Loan Forgiveness And Relief Work

  • If you still need financial aid, the government can help pay off some of the interest on your loans while you are still in school or during some specific periods after you graduate.
  • Federal government loans also offer some flexible repayment options and long-term plans where you can postpone your monthly repayments (deferment – here interest doesn’t accrue during the time you can’t make payments and forbearance – here interest accrues when you can’t make payments) if you are having financial problems and you can’t make said payments. Under special conditions, federal student loans can also offer loan cancellation, in this case, you don’t have to repay your loans anymore.
  • You can also become eligible to have some portion loans forgiven if you work some specific public service jobs and meet certain conditions.

After knowing getting to understand all this, now let’s see the process of obtaining a federal student loan.

How to Apply for Federal Student Loans

To apply for a federal student loan, you first have to complete a submission form called the Free Application for Federal Student Aid (FAFSA®).

Depending on your result on the FAFSA form, your school or college will decide whether to send you a financial aid offer or not. This offer may include federal student loans and your school will outline how to accept all or a portion of the loan.

Before loan funds can be disbursed to you, there are some things you will be required to do, which are:

  • You will need to complete entrance counselling, which is a procedure used to ensure you understand that you have to repay the loan you are taking; and
  • Sign a Master Promissory Note, where you agree to the various loan terms.

This process can vary at your school so contact the financial aid office in your school and get more details.


If you are taking loans, it’s okay to take loans lower than what your school recommends. You can always request more funds later if you need to but you should only borrow what you need.

Hope this information was useful, do use the comment box below and also share to help others.

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