

Federal student loans are for students of all incomes
Summary: No matter how much money you have, the government wants to lend you money for college.
Time to read: 2 minutes, 15 seconds
Who this is for: Parents
But the important thing is: you have to fill out the FAFSA form to get them. And just doing that could save you and your family a lot of money in loan interest.
Why you should borrow from the federal government first
Of all the student loans available, the federal government’s loan program is the cheapest and most flexible. That’s why it should be your first source to go to for loans, before any other.
Now you may hear of some families using a mortgage or home equity loan to help pay for college. Or even people using their credit cards or taking a personal loan to do the same thing.
But all those options have much higher interest rates than a federal government student loan. So why pay more for a loan with a high interest rate, when you can get one at a lower rate?
Limits on federal government student loans
If you have to borrow, federal loans are your best option. But they also have their limits. For example, over the course of your college education, as of 2023, you cannot borrow any more than $27,000 from the federal government. What’s more, you can only borrow up to a certain amount each year. Here’s how it works:
This means that if, for example, you don’t borrow that $5500 in your freshman year, you won’t be able to add that amount to your sophomore year loan. It only works on a year-to-year basis. So if you believe you are going to need that money at some time in your college career, you probably should borrow every year. After all, you can always pay back any amounts you don’t use early.
You might notice that the closer you get to graduating in four years, the more you can borrow. On the other hand, if it takes you five years to complete your Bachelor’s Degree, the Federal Government decreases the amount you can borrow for that fifth year to $4500. That means not only will you have an extra year of tuition and other college-related costs, you may also have to borrow more from lenders that charge a higher rate.
No matter how much money you have, the government wants to lend you money for college.