Government student loans are funded through two main sources, Direct Federal Loan program and the Federal Family Education Loan Program. A Direct Loan is funded directly by the U.S. Department of Education, whereas a FFELP loan is funded by various sources of student loan lenders. In either case, there are several loan options available.

• Stafford Loans generally feature the lowest interest rates available and are the most commonly sought after type of student loan. The Federal Stafford loan provides students with a choice of two different styles of loans, subsidized or unsubsidized. Students must meet specific low income requirements to be eligible for subsidized loans because all interest accrued for the loan amount is repaid to the loan provider by the federal government. An unsubsidized loan requires the student to pay for the interest each month while they are currently in school. http://www.gocollege.com/financial-aid/student-loans/federal/government-student-loans.html

• For college students whose parents are interested in assisting them with their college finances may choose a Federal Parent PLUS loan. This type of financing uses the credit history of the parents to determine the terms of the loan. Payments will begin from the time the loan is issued.http://www.gocollege.com/financial-aid/student-loans/federal/government-student-loans.html

• Colleges and universities may also be able to assist students with funding from the Federal Perkins loan. Here, the campus is responsible for dispersing funds to students on a first come first serve basis. This funding is reserved for students with extreme financial conditions.http://www.gocollege.com/financial-aid/student-loans/federal/government-student-loans.html

The content in this page is not a substitute for professional financial advice. Please contact a finance professional before using the information presented here.