The Federal student loan program is called the Direct Loan program. This is a low interest loan for students and parents to help pay for education beyond high school.
The loan is issued by the U.S. Group of education directly, and there are no banks complex with these loans. Because you are borrowing directly from the federal government you will be able to administer all things to do with your loans using the Direct Loan Servicing Center. This makes it easier especially if you have multiple loans from different schools.
Federal pupil Loan facts
There are a amount of types of loans that fall under the Direct Loan program and there are some prominent differences that you should be aware of about how they charge interest.
The subsidized loan is for students that have a financial need determined by federal regulations. With this loan there are no interest charges while the student is in school at least half time. There is also no interest charge during the six month grace period following the completion or termination of classes, nor any deferment periods.
The unsubsidized loan is not based on financial need, and there will be interest expensed as soon as the money is distributed. This means that even though you are not obligated to pay on the loan while in school, you will be expensed interest during this period. You will also be expensed interest during the six month grace period and any deferment periods.
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