Government Student Loans

The federal government here in the US provides students with a pretty efficient way to fund their education via government student loans.  But this is just one way to help pay for college.  The government actually has distinct three different ways you can pay for school - grants, work study, and loans.  And we're going to discuss all three of these options briefly in this article.

Government Loans

Government loans are borrowed money that must be paid back with interest.  Federal loans are available to both undergraduate and graduate students.  The amount you may receive depends on your grade level (freshman, sophomore, junior, senior).  And unlike grants, students do not have to demonstrate financial need to qualify for a government loan.

As far as government student loans go, there are two major categories of loans - Federal Perkins Loans and Stafford Loans

Federal Perkins Loans

Federal Perkins loans are given to students demonstrating the greatest financial need.  These loans are repaid to your college or university and they are available to full and part time students.

Undergraduate students can get a Perkins loan up to $4,000 each school year. Graduate students can borrow up to $6,000 a year.  Current interest rates of these loans are 5% in 2007 / 2008.

Federal Stafford Loans

Federal Stafford Loans are available to undergraduate and graduate students and are further divided into the William D. Ford Federal Direct Student Loan Program and Federal Family Education Loan (FFEL) program.  Both of these programs are run by the Department of Education and your school will usually participate in either one program or the other.

The primary difference between the Direct Student Loan program and FFEL loans is the ultimate lender.  With Direct Student Loans you are repaying the loan to the Department of Education.  With FFEL loans, you are repaying the loan to your private lender or a loan servicing agency.

FFEL Stafford Loans

Students must be enrolled at least half time to qualify for this type of Stafford loan.  FFEL loan amounts depend on enrollment status and do not depend on financial need.  The interest rate on these loans in 2007 was 6.80% for loans in repayment.  You can take between 10 and 25 years to repay a Stafford Loan.

FFEL PLUS Loans

Parents of dependent students are eligible for FFEL PLUS Loans.  Award amounts are calculated using the student's cost of attendance minus other aid the student receives.  The interest rate on these loans change annually, but in 2007 / 2008 it was 8.50%.

Direct Student Loans

Students must be enrolled at least half time to qualify.  Direct Loans awards depend on enrollment status and do not depend on financial need.  The interest rate on these loans in 2007 / 2008 was 6.80% for loans in repayment.  You can take between 10 and 30 years to repay a Direct Loan.

Direct PLUS Loans

Parents of dependent students are eligible for Direct PLUS Loans.  Award amounts are calculated using the student's cost of attendance minus other aid the student receives.  The interest rate on these loans change annually, but in 2007 it was 7.90%.

Finally, the table below outlines the maximum annual loan amounts for Direct and FFEL Stafford Loans.

Direct and FFEL Stafford Loans

Federal Grants

The second way that the federal government helps to make college costs a bit more affordable are through Federal Grant programs.  Federal Grants are money that does not have to be repaid - unless you suddenly withdraw from a school.  There are two types of federal grants available to students and those are Federal Pell Grants and Federal Supplemental Educational Opportunity Grants (FSEOGs).

Federal Pell Grants

Federal Pell Grants are awarded based on financial need.  The amount you might receive depends on the cost of the school and your status as a student (full or part time).  The size of the grants in 2007 / 2008 ranged from $400 to $4,310.

FSEOGs

Federal Supplemental Educational Opportunity Grants (FSEOGs) are awarded to undergraduate students demonstrating exceptional financial need.  Those students already eligible for Pell Grants are given priority with FSEOGs.  In 2007 / 2008, these grants ranged from $100 to $4,000.

Federal Work Study Programs

The final option offered by the federal government to help students pay for college is through work study programs.  Federal Work Study programs are available to undergraduate and graduate students that are either full or part time students.  These are part time jobs that allow students to earn money to pay for their education.  In this type of program you can be either an hourly worker or salaried employee. 

The work can be located either on campus or off campus and your school will pay you directly at least once a month.

On Campus Work Study

Working on campus usually means you are working for your school directly.  Jobs of this type can range from campus security to laboratory assistants.  All jobs will take into consideration your academic progress and field of study.

Off Campus Work Study

Some colleges and universities will offer students work study that is located off campus.  This will usually be for a non-profit or not for profit organization.  The work performed by this organization must be in the public interest.  Your work hours will take into consideration your class schedule and the work should be related to your field of study.

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