US Federal Student Loan Programs

A loan is a money you borrow and must pay back with interest. If you apply for a financial aid, you may be offered a loan as part of your school’s financial aid offer.


Students and parents can explore the site and access direct, first hand information about the Federal Student Loan Program, which includes some tools, related resources, and other helpful publications to help search and manage direct loans.


The Federal Student Aid is the US Department of Education’s site for free information on preparing for and helping the student fund education beyond high school.



If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come from the federal government or from private sources, such as a bank or financial institution.


Loans availed through the federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources.


The name “Obama Student Loan Forgiveness” has become the nickname for a program actually called the William D. Ford Direct Loan program. Many people only know about the program, and have heard of it through others as the Obama Student Loan Forgiveness program.


The name came about when President Obama reformed part of the Direct Loan program in 2009 in his Health Care and Education Reconciliation Act of 2010. It is important to keep in mind all the programs are offered for federal student loans.  Private loan borrowers are not able to benefit from any of the below information.



Here are some of the changes that were made by President Obama

  • The federal government will no longer give subsidies to private lending institutions for federally backed loans.
  • Borrowers of new loans starting in 2014 will qualify to make payments based on 10% of their discretionary income.
  • New borrowers would also be eligible for student loan forgiveness after 20 years instead of 25 on qualifying payments.
  • Money will be used to fund poor and minority students and increase college funding




View the PDF and click on the arrow at the bottom of the PDF to be able to view the next page.





What types of federal student loans are available?

The U.S. Department of Education has two federal student loan programs:


The William D. Ford Federal Direct Loan (Direct Loan) Program is the largest federal student loan program. Under this program, the U.S. Department of Education is your lender. There are four types of Direct Loans available:


  • Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.


  • Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan.


  • Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.


  • Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.




The Federal Perkins Loan Program is a school-based loan program for undergraduates and graduate students with exceptional financial need. Under this program, the school is lender.

If you have questions about Perkins Loan eligibility, please contact your school’s financial aid office.



To better understand the Federal Student Loan Programs, please visit

Or read the PDF below





What is a federal student loan?

Federal student loans allow students and their parents to borrow money to pay for a college or career school education. A federal student loan is made through a loan program administered by the federal government.



What is a private student loan?

A private loan is a nonfederal loan made by a private lender, such as a bank or credit union. The terms and conditions of private student loans are set by the lender, not the federal government.


If you’re not sure whether you are being offered a private loan or a federal loan, check with the financial aid office at your school.



How much money can I borrow in federal student loans?

If you are an undergraduate student:

  • Up to $5,500 per year in Perkins Loans depending on your financial need, the amount of other aid you receive, and the availability of funds at your college or career school.


  • $5,500 to $12,500 per year in Direct Subsidized Loans and Direct Unsubsidized Loans depending on certain factors, including your year in college.



If you are a graduate student:

  • Up to $8,000 each year in Perkins Loans depending on your financial need, the amount of other aid you receive, and the availability of funds at your college or career school.


  • Up to $20,500 each year in Direct Unsubsidized Loans.


  • The remainder of your college costs not covered by other financial aid in Direct PLUS Loans. Note: A credit check is required for a PLUS loan.



If you are a parent of a dependent undergraduate student:

  • The remainder of your child’s college costs that are not covered by other financial aid. Note: A credit check is required for a parent loan (called a PLUS loan).



Remember, you can borrow less than what your school offers you.  You should only borrow what you need. Why should I take out federal student loans?


Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it.





Federal student loans offer many benefits compared to other options you may consider when paying for college:


  • The interest rate on federal student loans is almost always lower than that on private loans—and much lower than that on a credit card!


  • You don’t need a credit check or a cosigner to get most federal student loans.


  • You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.


  • If you demonstrate financial need, you can qualify to have the government pay your interest while you are in school.


  • Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.


  • If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.



Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest.


You may not have to begin repaying your federal student loans right away, but you don’t have to wait to understand your responsibilities as a borrower.



HEAL Program loan

Is the U.S. Department of Education responsible for HEAL Program loans?

Yes. On July 1, 2014, the Health Education Assistance Loan (HEAL) Program was transferred from the U.S. Department of Health and Human Services (HHS) to the U.S. Department of Education (ED). However, it is no longer possible to obtain a new HEAL Program loan. The making of new HEAL Program loans was discontinued on September 30, 1998.


Before it was discontinued, the HEAL Program insured loans made by participating lenders to eligible graduate students in schools of medicine, osteopathy, dentistry, veterinary medicine, optometry, podiatry, public health, pharmacy, chiropractic, or in programs in health administration and clinical psychology.


ED is responsible for managing the servicing of nondefaulted HEAL Program loans and the collection of defaulted HEAL Program loans that remain.


Borrowers who have HEAL Program loans and members of the community may obtain more information as outlined below.


If you have HEAL Program loans and are not in default on those loans, contact your loan servicer for help with account-related questions. Use the contact information your loan servicer provided to you.


If you have HEAL Program loans and are in default on those loans, contact the Debt Collection Center for help with account-related questions:



Mailing Address:

Debt Collection Center

Accounting Services

Program Support Center

12501 Ardennes Ave

Suite 200

Rockville, MD 20857



If you have a general HEAL Program question (not a loan account question), contact ED’s HEAL Program Team at 1-844-509-8957 or



How do I get a federal student loan?

To apply for a federal student loan, you must complete and submit a Free Application for Federal Student Aid (FAFSA®).


Based on the results of your FAFSA, your college or career school will send you a financial aid offer, which may include federal student loans.


Your school will tell you how to accept all or a part of the loan.



Before you receive your loan funds, you will be required to

  • Complete entrance counseling, a tool to ensure you understand your obligation to repay the loan; and


  • Sign a Master Promissory Note (MPN), agreeing to the terms of the loan.



Contact the financial aid office at the school you are planning to attend for details regarding the process at your school.



Read more about the loan here



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