Federal Student Loans: What You Need to Know

Federal student loans, also known as Direct Loans, are funded by the government and may be awarded as part of your financial aid package if you completed the Free Application for Federal Student Aid (FAFSA^®).

Types of Federal Student Loans

There are different types of federal student loans:

• Direct Stafford Loans
• Direct PLUS Loans
• Direct Consolidation Loans

Direct Stafford Loans

Direct Stafford Loans are available to US citizens and eligible non-citizens enrolled at least half-time in an undergraduate or graduate program. No credit check or cosigner is required.

Stafford Loans may be subsidized or unsubsidized.

• Subsidized Stafford Loans are available to undergraduate students who demonstrate financial need, and the government pays the interest on these loans while the student is in school.
• Unsubsidized Stafford Loans are available to undergraduate and graduate students regardless of financial need and the student is responsible for paying the interest but can defer payments while in school.

Direct PLUS Loans

Direct PLUS Loans are available to eligible parents and graduate or professional students to help cover up to the full cost of education, less any other financial aid. A credit check is required for this loan type and borrowers must not have an adverse credit history.

Federal Consolidation Loans

Once you are in repayment or the grace period for your federal student loans, you have the option of consolidation. Consolidation allows you to combine multiple federal student loans into one loan with the option of an extended repayment period that will reduce your monthly payment. Visit loanconsolidation.ed.gov for more information.

How Much Students Can Borrow

Annual loan limits depend on your year in school and whether you are a dependent or independent student. Generally as you continue your education, you are able to borrow more. There are, however, specific caps on the amount of subsidized versus unsubsidized loans (more on that difference below) that students can receive as well as a total amount the loans can't exceed.

How to Apply for Federal Student Loans

To determine if you may be eligible for federal student loans, complete the FAFSA. There is an additional step for PLUS Loans for Parents, so check with your school for their preferred process.

You should maximize grants, scholarships and other free financial aid before taking student loans. If you need to borrow, compare federal and private student loans options and choose the loans that best fit your needs.

^{FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover Student Loans.}