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Federal student loans for college or career school are an investment in your future.

You must repay your loan, so be sure you understand your options and responsibilities.

If you apply for financial aid, you may be offered loans as part of your school’s financial aid offer. A loan is money you borrow and must pay back with interest.

If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come from the federal government, from private sources such as a bank or financial institution, or from other organizations. Loans made by the federal government, called federal student loans, usually have more benefits than loans from banks or other private sources. Learn more about the differences between federal and private student loans.


What types of federal student loans are available?

The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (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 are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
  • Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.
  • 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 allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.

How much money can I borrow in federal student loans?

It depends on whether you’re an undergraduate student, a graduate or professional student, or a parent.

  • If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.
  • If you are a graduate or professional student, you can borrow up to $20,500 each year in Direct Unsubsidized Loans. Direct PLUS Loans can also be used for the remainder of your college costs, as determined by your school, not covered by other financial aid.
  • If you are a parent of a dependent undergraduate student, you can receive a Direct PLUS Loan for the remainder of your child’s college costs, as determined by his or her school, not covered by other financial aid.

Why should I take out federal student loans?

Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it.

Federal student loans offer many benefits compared to other options you may consider when paying for college:

  • The interest rate on federal student loans is fixed and usually lower than that on private loans—and much lower than that on a credit card!
  • You don’t need a credit check or a cosigner to get most federal student loans.
  • You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.
  • If you demonstrate financial need, the government pays the interest on some loan types while you are in school and during some periods after school.
  • Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.
  • If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.

What should I consider when taking out federal student loans?

Before you take out a loan, it’s important to understand that a loan is a legal obligation that makes you responsible for repaying the amount you borrow with interest. Even though you don’t have to begin repaying your federal student loans right away, you shouldn’t wait to understand your responsibilities as a borrower. Get the scoop: Watch this video about responsible borrowing or browse the tips below it.

Be a responsible borrower.

  • Keep track of how much you’re borrowing. Think about how the amount of your loans will affect your future finances, and how much you can afford to repay. Your student loan payments should be only a small percentage of your salary after you graduate, so it’s important not to borrow more than you need for your school-related expenses.
  • Research starting salaries in your field. Ask your school for starting salaries of recent graduates in your field of study to get an idea of how much you are likely to earn after you graduate. You can also use the U.S. Department of Labor's Occupational Outlook Handbook or career search tool to research careers and salaries.
  • Understand the terms of your loan and keep copies of your loan documents. When you sign your promissory note, you are agreeing to repay the loan according to the terms of the note even if you don’t complete your education, can’t get a job after you complete the program, or you didn’t like the education you received.
  • Make payments on time. You are required to make payments on time even if you don’t receive a bill, repayment notice, or a reminder. You must pay the full amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time.
  • Keep in touch with your loan servicer. Notify your loan servicer when you graduate; withdraw from school; drop below half-time status; transfer to another school; or change your name, address, or Social Security number. You also should contact your servicer if you’re having trouble making your scheduled loan payments. Your servicer has several options available to help you keep your loan in good standing.

How do I get a federal student loan?

To apply for a federal student loan, you must first complete and submit a Free Application for Federal Student Aid (FAFSA®) form. Based on the results of your FAFSA form, your college or career school will send you a financial aid offer, which may include federal student loans. Your school will tell you how to accept all or a part of the loan.

Before you receive your loan funds, you will be required to

  • complete entrance counseling, a tool to ensure you understand your obligation to repay the loan; and
  • sign a Master Promissory Note, agreeing to the terms of the loan.

Contact the financial aid office at the school you are planning to attend for details regarding the process at your school.

Is the U.S. Department of Education responsible for Health Education Assistance Loan (HEAL) Program loans?

Yes. On July 1, 2014, the HEAL Program was transferred from the U.S. Department of Health and Human Services (HHS) to the U.S. Department of Education (ED). However, it is no longer possible to obtain a new HEAL Program loan. The making of new HEAL Program loans was discontinued on Sept. 30, 1998.

Borrowers who have HEAL Program loans and members of the community may obtain more information as outlined below.

  • If you have HEAL Program loans and are not in default on those loans, contact your loan servicer for help with account-related questions. Use the contact information your loan servicer provided to you.
  • If you have HEAL Program loans and are in default on those loans, contact the Debt Collection Center for help with account-related questions.

    For mail sent via U.S. Postal Service:
    HHS Program Support Center
    Accounting Services, Debt Collection Center
    Mailstop 10230B
    7700 Wisconsin Avenue, Suite 8-8110D
    Bethesda, MD 20857

    For mail sent via UPS or FedEx:
    HHS Program Support Center
    Accounting Services, Debt Collection Center
    Mailstop Seventh Floor
    7700 Wisconsin Avenue, Suite 8-8110D
    Bethesda, MD 20814
    Phone: 301-492-4664

  • If you have a general HEAL Program question (not a loan account question), contact ED’s HEAL Program Team at 1-844-509-8957 or HEAL@ed.gov.

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Last Reviewed: July 2020