Federal student loans are borrowed from the US government to pay for education expenses. They offer fixed interest rates, flexible repayment plans, and borrower protections not available with private loans.
10 steps across 1 sections
1. Steps Process
- Complete the FAFSA. All federal student loans require a completed FAFSA. File at studentaid.gov to determine your eligibility for each loan type.
- Review your financial aid award letter. Your school's award letter will specify which loans you are eligible for and the amounts offered. You are not required to accept the full amount.
- Understand each loan type.
- Available to undergraduate students with demonstrated financial need
- The government pays interest while you are in school (at least half-time), during the 6-month grace period after leaving school, and during deferment periods
- Annual limits: $3,500 (Year 1), $4,500 (Year 2), $5,500 (Years 3-4)
- Aggregate limit: $23,000 for dependent undergraduates
- Interest rate (2025-2026): 6.39%
- Available to undergraduate and graduate students; no financial need requirement
- Interest accrues from the date of disbursement (including while in school)
Common Mistakes
- Borrowing the maximum when you do not need it
- Not understanding interest accrual
- Ignoring PLUS loan costs
- Not making interest payments while in school
- Confusing federal and private loans
Pro Tips
- Subsidized first, always
- Make interest payments during school
- Track your total borrowing
- Understand the grace period
- Compare federal vs. private loans carefully