Federal Student Loan Basics

NOTICE: Federal legislation will very likely eliminate the FFEL version of federal student loans, effective July 1, 2010. See the Direct Loan Program information on this website, as Direct Loans will continue.

Federal student loans, unlike grants and work-study, are borrowed money that must be repaid, generally with interest, just like car loans and mortgages. These loans cannot be cancelled because you did not like the education you received, did not get a job in your field of study or because you are having financial difficulties. These are legal obligations, so before you take out a student loan, think about the amount you will have to repay over the years. The interest on federal student loans might be tax deductible. You should consult your tax advisor for tax advice.

Federal student loans may be used only to pay education expenses at the school. Education expenses include tuition, room and board, fees, books, supplies, equipment, dependent childcare expenses, transportation and rental or purchase of a personal computer.

Federal student loans are essentially made under three (3) programs today: (a) the Federal Family Education Loan Program or FFEL Program; (b) the William D. Ford Federal Direct Loan Program; and (c) the Perkins Loan Program. To obtain a loan under any of types of student loans (except a parent PLUS Loan and a Consolidation Loan), a borrower must complete and submit to the Department of Education a form called the "Free Application for Federal Student Aid" or FAFSA.

The FAFSA is available on the web at www.fafsa.ed.gov/. It may be filed electronically or printed and mailed to the Department of Education. More information about the FAFSA is available at www.fafsa.ed.gov/. If you want any grants or work-study too, you will also need to complete the FAFSA.

  • To be eligible for a federal student loan you must:
  • Be a U.S. citizen or eligible noncitizen (for most programs) with a valid social security number;
  • Be working toward a degree or certificate;
  • Have a high school diploma or a general educational development (GED) certificate; pass an approved ability-to-benefit test (if you don't have a diploma or GED certificate); or complete a home school education approved under state law;
  • Register with the Selective Service (if you're a male between the ages of 18 and 25); and
  • Maintain satisfactory academic progress once in school.

Representatives from the Department of Education are available to answer questions regarding federal student loans either at www.ed.gov or 1-800-4-FED-AID.