If you need to borrow money for college, consider federal student loans. These loans are the largest source of funding that can be used to cover tuition, room and board and text books.

With low interest rates and flexible repayment options, a federal loan is typically your least expensive source when borrowing money for college.
 

Federal Perkins Loans

Federal Perkins Loans are given to undergraduate and graduate students with great financial need. In order to apply, you must complete the Free Application for Federal Student Aid (FAFSA). After submitting the application, the school will notify you if you are eligible to receive this type of loan. It is important for you to apply as early as possible, as each school is only given limited funds by the federal government to offer the Perkins Loan. Note that the Perkins Loan offers the lowest interest rate of all other federal loans, so it is imperative that you apply even if you don’t think you will be eligible for financial aid.

Direct Stafford Loans

Direct Stafford Loans are the most common federal student loans. These loans are guaranteed by the federal government and are available to undergraduate, graduate, and professional students. There are two types of Direct Stafford Loans, including subsidized and unsubsidized.

Subsidized

If receiving a subsidized Stafford loan, you are not required to pay the interest accrued on the loan while you are enrolled in school. Instead, the government pays the interest (subsidizes) on the loan during this period. In order to be eligible to receive a subsidized Stafford loan, you must demonstrate financial need.

Unsubsidized

If receiving an unsubsidized Stafford loan, you are required to pay the interest accrued on the loan while enrolled in school. Interest begins accruing from the first disbursement of funds until the loan is paid in full.

To determine if you are eligible for either of these types of loans, you must complete the Free Application for Federal Student Aid (FAFSA).

Direct Plus Loans for Graduate and Professional Students

Direct PLUS Loans for Graduate and Professional Students are designed for graduate and professional students that need to borrow money for furthering their education. Direct PLUS Loans are guaranteed by the federal government and are offered at a fixed interest rate. To be considered, you must complete the Free Application for Federal Student Aid (FAFSA).

Direct Plus Loans for Parents

Direct PLUS Loans for Parents are designed for parents with dependent undergraduate students. With this loan, parents are able to borrow up to the entire cost of education, minus any other financial aid that has already been received. Direct PLUS Loans are guaranteed by the federal government and are offered at a fixed interest rate. To be considered, you must complete the Free Application for Federal Student Aid (FAFSA).

Reviewed April 2025
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.