The United States Department of Education federal student aid programs fund more than $100 billion per year in student aid. These programs administer grants, and fund work-study programs and guaranteed student loans. The financial aid department at the college, university or qualifying trade school the student will be attending should have complete information on types of federal aid, including federal student loans.
The first step for any student who is contemplating applying for financial aid should be the completion of the FAFSA, the Free Application for Federal Student Aid. Most financial aid granting institutions of higher learning in the United States utilize the FAFSA to determine eligibility for a student to receive any sort of financial aid, including government student loans.
Perkins Loans are made to the student through the college or university. They are available to students at the undergraduate, graduate, and post-graduate level. These loans are need-based and must be repaid to the school which made the loan.
Stafford Loans are divided into two types. Subsidized Stafford Loans are need-based and the U.S. Department of Education subsidizes the interest on the loan for a specified period. Unsubsidized Stafford Loans do not require a need-basis and the interest is not subsidized. Stafford loans may be made directly from the school or from a private lender.
Government student loans, unlike government student grants, must be repaid. In most cases, student loans cannot be discharged in a bankruptcy. Failure to repay student loans can result in the IRS seizing money from your income tax refund to apply to your outstanding loan balance.