While there are many ways to pay for college, federal student loans are one of the most popular options. These loans offer flexible payment options and often have low interest rates. The federal Direct Loan Program offers a few loan types.
A subsidized loan is your best option. With these loans, the federal government pays the interest charges for you while you're in college.
Ultimately, it's best to use subsidized student loans if you qualify, as you will pay less over time than with unsubsidized loans.
However, borrowers must demonstrate financial need to qualify for subsidized student loans. Unsubsidized student loans are still a good option since they typically offer better rates and terms than private student loans — plus anyone can get an unsubsidized loan, regardless of income.
Sallie Mae is a company that currently offers private student loans, but it has gone through several shifts. In 1972, Congress created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation.
Federal Loans
Student loans made by the federal government are commonly referred to as Direct Loans. There are four types of Direct Loans: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan).
If you have federal student loans, they may be either subsidized or unsubsidized loans. It's typically best to focus on your unsubsidized loans first since they accrue interest during school and your grace period.
$57,500 for undergraduates-No more than $23,000 of this amount may be in subsidized loans. $138,500 for graduate or professional students-No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study.
What type of student loan has the lowest interest rate? Federal student loans tend to offer the lowest interest rates, and there's no credit check for most federal student loans.
Among undergraduate and graduate student loan options, federal direct subsidized loans are the cheapest and most flexible.
Discover's private student loans may be a good option for borrowers with strong finances who won't need a co-signer. However, it is also one of few lenders that offers loans to international and DACA borrowers with a U.S. citizen or permanent resident co-signer.
However, the FAFSA enables the student to qualify for many types of financial aid from several sources. Some of this money is free money, some must be earned through work, and some must be repaid.
If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.
Direct Subsidized Loans are available only to undergraduate students who have financial need. Direct Unsubsidized Loans are available to both undergraduates and graduate or professional degree students. You are not required to show financial need to receive a Direct Unsubsidized Loan.
Sallie Mae is a great option for those interested in borrowing from a well-established lender with low rates, few fees and a variety of loan options. Borrowers with more unique educational needs, like funds for an online certification course, may have more luck finding a loan with Sallie Mae than with similar lenders.
Private student loans, including refinance loans, usually require a credit score of at least 670. However, knowing the precise requirements is tricky because private lenders consider their credit score guidelines a trade secret. The only way to find out if you qualify is to apply.
College Ave offers more flexible payment options than Sallie Mae, allowing you to check your rate without affecting your credit score. Sallie Mae offers a faster co-signer release period and more resources, such as a scholarship search tool and free quarterly FICO scores.
If you're an undergraduate, the maximum combined amount of Direct Subsidized and Direct Unsubsidized Loans you can borrow each academic year is between $5,500 and $12,500, depending on your year in school and your dependency status.
While newer Sallie Mae loans don't qualify for forgiveness, you may have other options. Find out if one of these strategies can help you better manage your debt.
There are several different types of financial aid for college. Some of these are free, while others need to be paid back with interest. Scholarships, grants, and work study are the three main financial aid types that don't need to be paid back.