Federal Student Aid (Studentaid.gov)

• Free Financial Aid
• Helpful Educational Resources
• Lower Your Payments
• Student Loan Forgiveness

Free Financial Aid

Not only are all of the Department of Education's resources free, they can also help students to find out if they qualify for additional government assistance for their education. While many loan companies won't be able to help individuals without well-established credit or a cosigner, the Department of Education's tools are designed to help these individuals find a viable way to pay for college. Having access to free grants and scholarships will help lower eligible students' dependence on loans, and ultimately, their student debt.

Helpful Educational Resources

Studentaid.gov emphasizes the importance of being fully informed and requires several debt counseling courses to be completed before an individual can move ahead with federal loans. This is a great learning method that is often only offered by private companies. Knowing how to graduate with low debt and understanding how to obtain the best loans possible makes a huge difference down the line. By holding students accountable to learn about financial aid before applying for loans, studentaid.gov is preparing them for a brighter financial future.

Lower Your Payments

If you are just beginning to repay your student loans or have been in the repayment process for a while, studentaid.gov outlines various options available to you if you need to lower or suspend your student loan payments for any reason.

One of the these repayment options includes an Income-Driven Repayment (IDR) Plan. Applying for an IDR can make your monthly payments more affordable because they will be based upon your income and not solely on interest rates. Enrollment in an IDR plan lasts for one year, and you must recertify your income before they year ends to stay on the plan. If you experience a drop in income, you can recertify early.

If an IDR is not the best option for you, you can apply for deferment or forbearance, allowing you to pause your loan payments or reduce your monthly payment amount temporarily. It is important to note that interest still accrues during deferment or forbearance. 

These repayment options are generally not available with private lenders, and are thus a perk of taking out a federal student loan through studentaid.gov.

Student Loan Forgiveness

Student loan forgiveness means that you no longer need to repay some or all of your loan, and is unique to federal student loans, as the majority of private lenders do not offer this service.

There are different types of loan forgiveness as outlined on studentaid.gov. It is important for you to understand the difference between them, especially if you need to apply for student loan forgiveness at some point. Types of federal loan forgiveness include:

• Public Service Loan Forgiveness
• Teacher Loan Forgiveness

In addition to student loan forgiveness, Federal Student Aid offers loan cancellation and discharge, which are similar to loan forgiveness, but have some small differences. Essentially, forgiveness or cancellation is made available to borrowers who can no longer make payments due to job loss, whereas loan discharge is available when a borrower's school is closed or they experience permanent disability.

It is important to note that certain types of forgiveness or discharge are only available with specific types of federal loans.

• Lengthy Application Process
• No Refinancing Services

Lengthy Application Process

Obtaining a federal student loan in the first place can be a more involved process. Unlike private loan consolidation companies who benefit financially from their customers, the FAFSA and federal loans are designed as a privilege for students who need financial aid. That means that instead of a "quick, three-minute pre-approval quiz," as you are likely to see on private loan sites, acquiring federal student aid requires more time. For example, there are mandatory counseling sessions that must be completed by anyone looking to apply for a federal loan. Thus, if you were hoping for a quick and simple approval process, you will find that this is not the case.

No Refinancing Services

Federal Student Aid does not offer refinancing services. If you would like to refinance your federal student loans you will need to look into other private lenders that offer student loan refinancing.

It is important to note that although you can get lower rates and better terms by refinancing your federal student loans, you will forfeit any loan deferment or forgiveness options that are offered through Federal Student Aid. Therefore, it is important that you carefully assess your needs and your ability now and in the future to make payments on your student loans.