There are different types of loans provided by the federal government depending on your level of income and education. Every loan has its requirements, repayment terms and conditions, as well as interest rates. Below are some loans that are managed by the education department.

Parent PLUS

Some education department loans are also accessible to parents. For parents who wish to assist their kids pay for school, a Parent PLUS loan is usually what you are put into with about a 7.0% interest rate. You can borrow up to the entire cost of attendance excluding any other financial assistance the child receives. There is usually a disbursement fee associated with Parent PLUS loans which totals 4.264% of the entire amount. This type of loan can be if a child is studying at least half-time for an undergraduate degree. The loan is under the parent`s name; therefore, he or she is responsible for reimbursing it upon graduation. These loans are different from other federal loans, in that the government does take into account your credit history when assessing your application. In case you do not meet their requirements, you might require a guarantor on the loan who will agree to pay the loan if you fall into default.

Grad PLUS

You might qualify for this kind of loan if you are a student attending graduate school or taking up a professional degree at least part-time. Similar to Parent PLUS loans, these loans have an interest rate of 7.0%, and they need a credit check. Although, PLUS loans given to students have additional benefits as compared to those offered to parents. These loans are suitable for all income driven repayment plans and are eligible for PSLF without the requirement of being consolidated in advance.

Direct Subsidized

These are among the best loans you can borrow for school. With this type of loan, the education department pays the accumulating interest while you are studying for at least half the time, throughout your grace period after graduating, and if you end up in deferral. Even when you begin repaying the interest, the rates have been recently reduced. From January 2018, these loans have had an interest rate of about 4.45%. On the other hand, these education department loans can only be given to undergraduate students who need financial assistance. The government issues the credit although your college decides whether you meet the economic conditions and the amount you can be given. Different schools may have different requirements; therefore, you may be loaned more funds from one college than another.

Direct Unsubsidized

Direct unsubsidized loans are accessible for both graduate and undergraduate students, and they are an affordable option. These loans also have a reduced interest rate – about 4.45% for undergraduates and 6.0% for graduates. The significant difference between direct subsidized and direct unsubsidized loans is that the education department won’t cover the accumulating interests on the unsubsidized loans.

Perkins Loans

The Perkins Loan program was cut completely in 2017. Present borrowers with these types of loans still relish the advantages even though the federal government is not issuing any more of these at the moment. These type of loans were specifically for low-income students, and was a cheaper type of debt compared to other debt forms. Perkins Loans usually boasted an interest rate of 5.0% and a grace period of nine months, making it among the best types of financial aid accessible. Unfortunately, these loans have some serious restrictions as they are often ineligible for PSLF or IDR payment programs. That doesn’t mean you can’t reduce your payment! They do qualify for income driven repayment and PSLF by consolidating the debt into a Direct Consolidation Loan.

Family Federal Education Loans

These kinds of loans were also eliminated back in 2010 and no longer issued thereafter. These types of loans were issued by private lenders but guaranteed by the government. Just like Perkins Loans, these loans are initially ineligible for PSLF. But you can consolidate the debt into a Direct Consolidation Loan and then qualify for PSLF. Installments made on the debt prior to consolidation do not qualify towards the forgiveness total of 120, meaning the Department of Education will start payment 1 once the loan is consolidated as counting toward the 120 before full forgiveness.

Do you have any of these Debt of Education Student Loan Payments?

Often people don’t even know which type of Department of Education loan they have which adds to the confusion. It’s difficult to know how to approach each loan as there are different methods to get to a lower payment. This is where Alliance Loan Support’s expertise comes in! If you have any of these Debt of Education loans and have any questions we are here to give you the answer! We have helped thousands of people with these exact loans consolidate or get into a new program that lowered their payment significantly. Don’t let the complicated nature of these federal loans get in the way of a lower payment! You can call our 800 number to speak to rep directly or fill out the form below!