Federal Student Loan

The article may contain affiliate links from our partners. Our reviews are not impacted and opinions are our own. Learn how we make money to support our financial wellness mission.

A federal student loan is funded by the federal government to help pay for your education. A federal student loan is borrowed money you must repay with interest.

The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct 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

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

You’re not usually charged interest on the loan during certain periods, such as when you’re in school at least half-time.

Direct Unsubsidized Loans

Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.

You’re responsible for paying the interest during all periods.

Direct PLUS Loans

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. Eligibility is not based on financial need, but a credit check is required.

Borrowers who have an adverse credit history must meet additional requirements to qualify.

Direct Consolidation Loans

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

Learn more: Ultimate Guide to Federal Student Loans