Learn About the Types of Federal Loans

Taking out a loan for education is an important decision. It can affect your future for several years to come and isn’t a choice to be taken lightly. As a student, you have several choices when it comes to types of federal loans. These loans come in all shapes and sizes, and it’s important to know just what you’re getting into with each of them. Study up on the types of federal loans to find the right decision for your future.


Stafford loans are the most common type of federal student loans. The funds from these loans comes directly from the federal government through a program called the Federal Direct Student Loan Program. These loans come in two types: subsidized or unsubsidized. The type can help determine your maximum loan amount as well as your interest rate.

If you have a subsidized loan, it will free you of responsibility of repayment until you have completed your education program. Your interest rate will most likely be around 3-4%. The government will pay this interest while you’re still in school. Subsidized stafford loans are most typically reserved for students who’ve known financial hardship, as borrowers of this loan typically come from households whose income is less than 50,000 a year.

In an unsubsidized stafford loan, the borrower is responsible for paying off all of the interest. Again, these rates are typically fixed around 3-4%. Payments, however, are deferred until graduation. Any student is eligible for this plan.

Direct Consolidation

Many students get loans from a different source or borrower every year, if not every quarter or semester. With this common practice in place, it’s not uncommon for a student, upon graduation, to have several payments due each month.

Asking for a direct consolidation loan is an easy way to simplify this process. This is a type of federal loan that will allow you to make one payment per month to one server. The consolidation is flexible, working within your budget of what you’re able to pay. Though there is no fee to consolidate, you can only do it once, and if you are involved in certain loan forgiveness programs, the requirements may be reset upon consolidation. Another downside is that you might stretch your payments, generating more interest.

Perkins Loans

The Perkins loan was an extremely popular type of federal loan, particularly for need-based students, but certain legislation brought the program to an abrupt end in late 2017. Unless a student has already received the loan, all activity of the program has been effectively shut down.

The Perkins loan was considered far more desirable due to its subsidization, its fixed interest rate, and its longer grace period, in this case nine months. Due to its incredibly appealing terms, the loan was offered by the college in question and was reserved for students demonstrating particularly difficult financial circumstances.

Qualifying for the PSLF

If you have any of these types of federal loans and work in the public sector, there is a high chance you’ll be able to qualify for the Public Service Loan Forgiveness program. Please refer to our Do I Qualify? Page, as well as this page for more information on the program itself.

Please contact us if you have any questions, or if you’d like to be put in contact with the experts who can help you properly apply to the PSLF.