Student loans are the most prevalent form of financial aid to help students and families pay for higher education. The decision to borrow to pay for higher education is an important one that only you and your family can make. Keep in mind that any money you borrow must be repaid. A student loan is a financial obligation that will not go away until it is paid in full — unless, under certain circumstances, a borrower qualifies for loan discharge or forgiveness.
Federal student loans are offered under two government programs — the Federal Direct Loan Program (FDLP) and the Federal Perkins Loan Program (note that other federal programs have been discontinued, as explained further below). Additional loans are available through many state governments and private lending institutions.
- FDLP (Direct) loans include Direct subsidized, Direct unsubsidized, Direct PLUS (for parents of dependent undergraduate students, and graduate and professional students), and Direct Consolidation loans.
- Federal Perkins loans, which are available for undergraduate and graduate students with exceptional financial need; these loans have a lower interest rate than Direct unsubsidized loans.
- FFELP loans, which, effective July 1, 2010, are no longer available, include Stafford loans (subsidized and unsubsidized), PLUS loans (for parents of dependent undergraduate students, and graduate and professional students), and Consolidation loans.
- FFELP purchased loans are student loans the Department of Education purchased from some FFELP lenders.
- State loans are available to Texas students through the B-on-Time Loan Program and the College Access Loan Program.
- Private loans are also known as "alternative" or "nonfederal" student loans made by private lending institutions. These loans should be used only when your income, savings, and other financial aid, including federal loans, as applicable, do not meet the cost of attendance.