by Edwin Ivanauskas | Tags: Personal Finance, Loans

It is common knowledge that having a college degree can increase your yearly income by nearly double. But this huge increase in income doesn't come cheap. A student typically has to pay not only their yearly tuition, but also living expenses. The most common and helpful student loans happen to be federal student loans.

Federal programs are the largest source of college loans; there are two main programs, the Federal Family Education Loan Program (FFELP) and the William D. Ford Federal Direct Loan Program (FDLP). You can apply for a FFELP loan through banks, education finance companies, and credit unions. Your school may recommend a certain institution for you to get your loan through but you are free to choose whichever institution you want.

The FFELP loans term's include a lower interest rate compared to other federal student loans, your interest payments can be paid by the government while you are in school, you won't have to make your loan payments while you are in school, you will have longer to repay your loan, and you may get flexible credit requirements.

Applying For a Federal Student Loan

The Free Application for Federal Student Aid (FAFSA) is a form that students must fill out in order to be eligible for federal student aid including grants, loans, and work study programs. This form must be filled out yearly by both current and future students who wish to receive federal student aid. The form is somewhat lengthy but can be easily accessed and filled out on the official federal student aid website at (http://www.fafsa.ed.gov/).

In addition, a student's chosen school may require a localized student loan application before they will disperse the loans granted through the federal government. It is important to check with the chosen school to make sure all requirements for loan dispersal are met.

Federal Stafford Loan

The Federal Stafford Loan and it is one of the most common sources of college loan funds. There are two different types of Stafford loans, subsidized loans, and unsubsidized loans.

• Subsidized loans:
  these loans are designed on a need-basis and the interest will not accrue on the loan while you are in school at least half time and during grace and authorized deferment periods (6 credit hours standard, excluding summers). You will have to start paying interest when you leave school and start paying back your loan. Before you are required to pay back the loans, there is a 6 month grace period to find employment.
• Unsubsidized loans
  these loans are not on a need-basis and you will be responsible for all the interest which will accrue while you are in school. If you are do not qualify for a subsidized loan then you may qualify for an unsubsidized loan.

Federal Perkins Loans

A Federal Perkins Loan is a low interest loan for both undergraduates and graduate students with "exceptional" financial needs.

The criteria for this type of federal student loan are:

• Must have U.S. citizenship, permanent residency, or eligible noncitizen status,
• Be enrollment in an eligible school at least half time in a degree program,
• Maintain satisfactory academic progress,
• Have no defaults, unsolved, or overpayments owed on Title IV educational loans and grants,
• Satisfied of all Selective Service requirements.

The school will determine who has the greatest need for this type of loan because the U.S. Department of Education provides a certain amount of funding to each school.

Federal PLUS loans

This loan is a low interest student loan for parents or undergraduate, dependent students. This loan is called a Parent PLUS loan and families can fund the entire cost of their child's education. No collateral is required for this type of loan and it is available regardless of income or assets, and the parents will not have to prove financial need, however a credit check is required. Federal Student Loans are a cheap way to affordably go back to school

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