Student Loans

Author:

Moneyzine Editor

2 mins

September 25th, 2023

Advertiser Disclosure

Definition

The term student loan is used to describe borrowed money, which must be repaid with interest. Students can be studying for undergraduate or graduate degrees to be eligible for a loan. Parents of students may also borrow money to help pay for the educational expenses of dependent undergraduate children.

Explanation

Students demonstrating the greatest financial need are eligible for Federal Perkins Loans. These loans are funded by the federal government, but repaid directly to the school. Students are also eligible for Stafford Loans, while parents of students can apply for PLUS loans.

Student loans are currently made available through two programs:

William D. Ford Federal Direct Loan (Direct Loan) Program: Loans are made directly from the federal government, and are repaid to the U.S. Department of Education. The student loans in this program include:

Direct Subsidized Loans: available to students demonstrating financial need.
Direct Unsubsidized: available to all students, regardless of demonstrated need.
Direct PLUS Loans: available to parents of undergraduate students
Direct Consolidation Loans: allows students to consolidate loans under one loan servicer

Federal Perkins Loans: Loans are made directly with, and repaid to, the educational institution the student attends. Federal Perkins Loans are made available to both undergraduate and graduate students demonstrating exceptional financial need.

Student loans are one of the three forms of financial aid available to students. The other two forms of student aid are grants and work study.

Note: As a result of the Health Care and Education Reconciliation Act of 2010, the Family Education Loan (FFEL) Program was phased out beginning on July 1, 2010. Information for this program appears below.

Family Education Loan (FFEL) Program: Loans made through private lenders, with funding guarantees from the federal government. Loans are repaid directly to the private lending institution. The student loans in this program include:

Federal Stafford Loans
Federal PLUS Loans
Federal Consolidation Loans

Related Content

What Can Help You Meet Your Budget While Shopping for Important Items?
Budgeting while ensuring you don't compromise on quality can seem daunting. Whether filling your pantry, updating your wardrobe, or keeping up with the latest tech, smart shopping strategies are crucial for keeping your finances in check.
April 2nd, 2024
How to Make a Million Dollars in 10 Years
Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
March 26th, 2024
How to Apply Maslow’s Hierarchy to Your Money This Year
You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
March 27th, 2024
How to Tackle Multiple Savings Goals
When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
March 22nd, 2024
The Countdown to Early Retirement: 10 Expenses to Eliminate
Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
March 22nd, 2024

Contributors

Author