Types

• There are three major student loan programs. Federal Stafford Loans can be either subsidized or unsubsidized and are open to both graduate and undergraduate students. You are not charged interest on a subsidized loan while in school, but you must pay the interest on an unsubsidized loan (repayment is deferred while you are in school). Federal PLUS Loans are available for parents and for some graduate and professional students. Federal Perkins Loans are low interest loans that allow undergraduates to borrow up to $400/year and graduate students up to $6000/year (2008 figures).
  
  

Eligibility

• The basic requirements for any federal financial aid, including loans, are the same. You must be a U.S. citizen or eligible alien and have a valid social security number. You must be accepted into a participating school. If you are male and are between 18 and 25 years old, you have to register with Selective Service. A person who is in default on a student loan, owes a refund on a grant, or who has been convicted on a drug charge while receiving federal student aid is not eligible.
  
  

Time Frame

• The award year for all federal student aid runs from July 1 to June 30. Your application must be received and processed before the end of the awards year. However, it is very important to get the application submitted as soon as possible because many schools have earlier deadlines. The Federal Student Aid Office recommends you submit your application prior to the start of the award year if possible.
  
  

Application

• Most (though not all) student loans programs require that you demonstrate financial need. To do this, you must fill out the FAFSA (Free Application for Federal Student Aid) form. Normally this is done online at fafsa.ed.gov. You will need your tax returns, bank statements, and a list of assets and debts such as savings accounts, stocks and other securities, property or business holdings, and mortgages. If your parents are listed on the form, the same information is required from them. Once you've completed the FAFSA form and indicated which school(s) to send it to, the application will be processed and your eligibility, type of awards and amount of aid will be determined.
  
  

Considerations

• The first thing to keep in mind is that once you leave school student loans must be repaid, so don't borrow unnecessarily. You should check with your school to see which programs they participate in. When you submit the FAFSA, it acts as the application for all federal student aid programs, not just student loans. Don't neglect this because other programs are grants that do not have to be repaid. In addition, many schools use the FAFSA to determine your eligibility for other financial aid, scholarships, and state programs. Your chances of receiving aid from these sources is improved if you file the application as early as possible.