Benefits of Federal Student Loans

By: Bryan Lee, UHEAA

If you are thinking about borrowing money for your education make sure you understand your options and take care not to overburden yourself with debt. When you compare federal student loans and private student loans you’ll notice some important differences. The following list explains some of the ways federal student loans are more flexible than most private student loans.

Woman thinking about federal student loans and supplemental student loans














  • You will not have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half-time.
  • Many federal loans provide you a grace period of 6 or 9 months after you leave school, before you must start repaying your loan.
  • The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates.
  • Undergraduate students who demonstrate a financial need will most likely qualify for a subsidized loan.
  • For these loans, the government pays the interest while you are enrolled in school at least half-time.
  • You don’t need to get a credit check for most federal student loans (except for PLUS loans), and federal student loans can also help you establish a good credit record.
  • You won’t need a cosigner to get a federal student loan in most cases.
  • The interest you pay may be tax deductible.
  • Loans can be consolidated into a Direct Consolidation Loan, which can often make repayment a much simpler process
  • If you are having trouble repaying your loan, you may be able to temporarily postpone (deferment, forbearance) or lower your payments.
  • There are several repayment plans, including an option to tie your monthly payment to your income.
  • You may be eligible to have some portion of your loans forgiven if you work in public service.

Supplemental student loans definitely have a place in higher education and can help you bridge the gap between your federal student aid and the cost of your education.