Student Loan Ultimate Guide 2023
There are several options for borrowing student loans, including federal student loans, private student loans, and alternative loans. Here is a brief overview of each type of student loan borrowing option:
Federal Student Loans
These loans are funded by the U.S. government and are available to eligible students to help pay for higher education. Federal student loans include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan) Program. Under this program, the U.S. Department of Education is your lender.
There are four types of Direct Loans available
| Loan Type | Description | Eligibility |
| Direct Subsidized Loans | Made to eligible undergraduate students who demonstrate financial need | Undergraduate students with financial need |
| Direct Unsubsidized Loans | Made to eligible undergraduate, graduate, and professional students | Undergraduate, graduate, and professional students |
| Direct PLUS Loans | Made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses | Graduate or professional students and parents of dependent undergraduate students |
| Direct Consolidation Loans | Allows you to combine all of your eligible federal student loans into a single loan | Any borrower with eligible federal student loans |
How much money can I borrow in federal student loans?
It depends on whether you’re an undergraduate student, a graduate or professional student, or a parent.
| Loan Type | Maximum Amount per Year | Eligibility |
| Direct Subsidized Loans | $5,500 to $12,500, depending on year in school and dependency status | Undergraduate students |
| Direct Unsubsidized Loans | $20,500 for graduate or professional students; $5,500 to $12,500 for undergraduate students, depending on year in school and dependency status | Undergraduate, graduate, and professional students |
| Direct PLUS Loans | Remainder of college costs, as determined by school, not covered by other financial aid | Graduate or professional students and parents of dependent undergraduate students |
Why should I take out federal student loans?
Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it. Federal student loans offer many benefits compared to other options you may consider when paying for college:
| Benefit | Description |
| Fixed, low interest rate | The interest rate on federal student loans is fixed and usually lower than that on private loans |
| No credit check or cosigner required | Most federal student loans do not require a credit check or cosigner |
| Deferred repayment | You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time |
| Interest paid while in school | If you demonstrate financial need, the government pays the interest on some loan types while you are in school and during some periods after school |
| Flexible repayment plans | Federal student loans offer flexible repayment plans and options to postpone payments if you’re having trouble making payments |
| Loan forgiveness | Some federal student loans may be forgiven if you work in certain jobs and meet certain conditions |
As a borrower, there are several points to consider when taking out federal student loans:
- Eligibility: Make sure that you are eligible to receive federal student loans. To be eligible, you must be a U.S. citizen or eligible noncitizen, be enrolled at least half-time in an eligible degree or certificate program, and be in good academic standing.
- Interest rates: Federal student loans generally have lower interest rates than private loans. It’s important to compare the interest rates on different loan options and choose the one that is most affordable.
- Repayment terms: Federal student loans offer a variety of repayment options, including income-driven repayment plans and loan forgiveness programs. Consider which repayment plan is best for your financial situation.
- Borrowing limits: Federal student loans have borrowing limits, which vary depending on your year in school and your dependency status. Make sure that you don’t borrow more than you need, as excess borrowing can lead to financial difficulties later on.
- Fees: Federal student loans have origination fees, which are a percentage of the loan amount. These fees are deducted from the loan amount before it is disbursed to you, so you’ll receive less money than you borrow. Make sure to factor this into your budget.
- Creditworthiness: If you have a poor credit history, you may be required to find a co-signer for your student loans. A co-signer is someone who agrees to take on the legal responsibility for repaying your loans if you are unable to do so.
- Impact on financial aid: Keep in mind that taking out student loans can affect your eligibility for financial aid in the future. It’s important to consider the long-term consequences of borrowing and make sure that you are comfortable with the amount of debt you are taking on.
How do I get a federal student loan?
To apply for a federal student loan, you must first complete and submit a Free Application for Federal Student Aid (FAFSA®) form. Based on the results of your FAFSA form, your college or career school will send you a financial aid offer, which may include federal student loans. Your school will tell you how to accept all or a part of the loan.
Before you receive your loan funds, you will be required to
Complete entrance counseling, a tool to ensure you understand your obligation to repay the loan; and
Sign a Master Promissory Note, agreeing to the terms of the loan.
Contact the financial aid office at the school you are planning to attend for details regarding the process at your school.
The Health Education Assistance Loan (HEAL) Program: A Brief Overview
The HEAL Program was a federal loan program that provided financial assistance to students pursuing careers in healthcare-related fields. The program was created in the late 1970s and operated until the late 1990s, when it was phased out due to concerns about its financial viability.
How the Program Worked
The loans were provided by the US Department of Health and Human Services (HHS) and were intended to help students pay for the costs of education in fields such as medicine, nursing, and dentistry. The loan amount was based on the student’s financial need, and repayment of the loan began after the student graduated or left school.
Eligibility Criteria
To be eligible for a HEAL loan, students had to be enrolled in an eligible program at a participating school. Eligible programs included those in medicine, dentistry, osteopathy, optometry, podiatry, and veterinary medicine, as well as certain programs in allied health fields such as nursing, physical therapy, and occupational therapy.
Advantages of the HEAL Program
The HEAL program provided an important source of financial assistance for students pursuing careers in healthcare-related fields. It helped students who might not have been able to afford the high cost of education to pursue their desired careers and make a positive impact on the healthcare industry.
Disadvantages of the HEAL Program
However, the HEAL program faced some significant challenges, including concerns about its financial viability. The program was ultimately phased out in the late 1990s due to concerns that it was not financially sustainable.
Conclusion
In conclusion, the HEAL Program was a federal loan program that helped students pursuing careers in healthcare-related fields to pay for the costs of education. Although the program had some advantages, it faced significant financial challenges and was ultimately phased out. Despite the program’s end, it helped many students who otherwise couldn’t afford it to pursue their desired career in healthcare.
HEAL Interest Rates
Below is information on the maximum interest rates for HEAL Program loans. The information is separated into two sections—Current Maximum Interest Rates and Maximum Interest Rates for Previous Three Quarters.
Current Maximum Interest Rates
| Maximum Interest Rates for Quarter Ending March 31, 2023 | |
| Maximum variable interest rate for loans made before Jan. 27, 1981 | 7.75% |
| Maximum interest rate for variable rate loans executed on or after Jan. 27, 1981, through Oct. 21, 1985 | 7.75% |
| Maximum interest rate for variable rate loans executed on or after Oct. 22, 1985 | 7.25% |
The average bond equivalency rate for 91-day U.S. Treasury Bills during the period Oct. 1, 2022, through Dec. 31, 2022 was 4.153 percent.
Maximum Interest Rates for Previous Three Quarters
| Rates for Quarter Ending | Loans Made Prior to 1/27/1981 | Loans Made On or After 1/27/1981* | Loans Made On or After 10/22/1985** |
| Dec. 31, 2022 | 6.25% | 6.25% | 5.75% |
| Sept. 30, 2022 | 4.75% | 4.75% | 4.25% |
| June 30, 2022 | 3.88% | 3.88% | 3.38% |
*Legislation Amended – 12 percent annual interest cap repealed – quarterly interest rate on loans made on or after 1/27/1981 through 10/21/1985, became a floating rate based on 91-day T-Bill rate plus 3 1/2 percent, rounded to the next higher 1/8 of one percent.
**Legislation Amended – variable interest rate calculation amended – quarterly interest rate on loans made on or after 10/22/1985 became a floating rate based on 91-day T-Bill rate plus 3 percent, rounded to the next higher 1/8 of one percent.
Is the U.S. Department of Education responsible for Health Education Assistance Loan (HEAL) Program loans?
Yes. On July 1, 2014, the HEAL Program was transferred from the U.S. Department of Health and Human Services (HHS) to the U.S. Department of Education (ED). However, it is no longer possible to obtain a new HEAL Program loan. The making of new HEAL Program loans was discontinued on Sept. 30, 1998.
Borrowers who have HEAL Program loans and members of the community may obtain more information as outlined below.
If you have HEAL Program loans and are not in default on those loans, contact your loan servicer for help with account-related questions. Use the contact information your loan servicer provided to you.
If you have HEAL Program loans and are in default on those loans, contact the Debt Collection Center for help with account-related questions.
For mail sent via U.S. Postal Service:
HHS Program Support Center
Accounting Services, Debt Collection Center
Mailstop 10230B
7700 Wisconsin Avenue, Suite 8-8110D
Bethesda, MD 20857For mail sent via UPS or FedEx:
HHS Program Support Center
Accounting Services, Debt Collection Center
Mailstop Seventh Floor
7700 Wisconsin Avenue, Suite 8-8110D
Bethesda, MD 20814
Phone: 301-492-4664If you have a general HEAL Program question (not a loan account question), contact ED’s HEAL Program Team at 1-844-509-8957 or HEAL@ed.gov.
Private Student Loans
These loans are offered by private lenders and are not backed by the government. Private student loans generally have higher interest rates than federal student loans and may have less favourable terms and conditions.
Here is the 12 Lenders providing Student Loans
| Lender | Min. credit score | Fixed APR | Variable APR | Learn more |
| Ascent Credit-based Student Loan | Varies | 4.62-15.18% | 5.31-14.07% | on Ascent’s website |
| College Ave Private Student Loan | Mid-600s | 3.99-14.96% | 3.99-14.86% | on College Ave’s website |
| Custom Choice Loan, Powered by Cognition | Varies | 3.65-12.47% | 5.16-13.75% | on Cognition’s website |
| Discover Undergraduate and Graduate Student Loans | Does not disclose | 5.49-15.99% | 5.87-16.72% | on Discover’s website |
| Education Loan Finance Private Student Loan | 680 | 3.98-11.99% | 3.98-11.99% | on Education Loan Finance’s website |
| Earnest Private Student Loan | 650 | 4.49-13.95% | 3.99-12.19% | on Earnest’s website |
| Funding U Private Student Loan | None | 7.49-12.99% | 7.49-12.99% | on Funding U’s website |
| Laurel Road Private Student Loan | 670 | 3.49-11.99% | 3.49-11.99% | on Laurel Road’s website |
| MPower Financing Private Student Loan | Varies | 8.99-15.99% | 8.99-15.99% | on MPower Financing’s website |
| PNC Student Loan Center Private Student Loan | 660 | 6.99-14.99% | 6.99-14.99% | on PNC Student Loan Center’s website |
| Sallie Mae Private Student Loan | Mid-600’s | 4.50-14.83% | 5.00-15.33% | on Sallie Mae’s website |
| SoFi Private Student Loan | Mid-600s | 4.49-14.83% | 4.63-13.88% | on SoFi’s website |
Alternative Loans
These loans are also offered by private lenders and are not backed by the government. Alternative loans may be an option for students who have exhausted other sources of financial aid and are unable to obtain a private student loan. Alternative loans often have higher interest rates and less favourable terms and conditions compared to federal student loans.
Note:It’s important to carefully consider all of your options before deciding on a course of action. It may be helpful to speak with a financial advisor or a loan counsellor to explore your options and determine the best course of action for your specific situation.
