7 Reasons To Apply For Federal Student Loans First

Whether you’re hitting the books at a four-year university or a community college, the reality is that the cost of education can be overwhelming. That’s why financial aid is a game changer. Scholarships are the golden ticket — free money that doesn’t have to be paid back. But let’s be real: for most students, scholarships alone won’t cover all the expenses. Once you’ve tapped out your free money options, student loans often become the go-to solution for funding your education.

Now, there are two types of student loans to consider: federal student loans and private student loans. Both can help, but they come with some key differences. Federal student loans have a ton of advantages, which is why many financial aid experts will tell you to go for them first. But why is that the case? Here are 7 reasons why you should prioritize federal student loans over private loans when you’re looking to fund your college education.

1. Your Credit Doesn’t Matter

Okay, so here’s the deal: when you’re applying for federal student loans, your credit score is pretty much irrelevant. Seriously. No credit check is required for most federal loans (except for PLUS loans, but we’ll get to that later). Federal loans are granted based on your financial need, not your credit profile. This is huge for students who may not have a long credit history — or any credit history at all. So, even if you’ve never borrowed money before, you can still qualify for federal student loans as long as you complete your FAFSA (Free Application for Federal Student Aid).

Pro Tip: If you have no credit or a low credit score, federal loans are your best friend. They’ll help you get the funding you need without the added stress of worrying about your credit score.

2. Lower Interest Rates

Federal student loans generally come with lower interest rates than private loans. That means you’ll be paying less in the long run. With a fixed interest rate, you know exactly what you’re getting into, and it won’t change over time. On top of that, the federal government has the power to offer lower rates because they’re able to take a lot of the risk off the table by offering these loans to students at an affordable rate. This makes federal loans the most cost-effective option.

When you compare that to private student loans, where interest rates can vary (and often spike for borrowers with bad credit), federal loans are a no-brainer.

Real Talk: A few percentage points might not sound like much at first, but trust me — when you’re paying back thousands of dollars, that extra interest adds up fast!

3. You May Qualify for Subsidized Loans

One of the standout features of federal student loans is the option for subsidized loans. Here’s how it works: If you qualify for a subsidized loan, the federal government will pay the interest on your loan while you’re in school. That means you won’t be accumulating interest while you’re hitting the books, and that’s money you’re saving in the long run.

But, heads up: not everyone qualifies for subsidized loans. Eligibility depends on your financial need, and you’ll have to fill out the FAFSA to see if you qualify. But it’s definitely worth doing — free money in the form of interest savings is a major win.

Tip: If you qualify for subsidized loans, you’re essentially getting a head start on paying down your debt without the added interest burden.

4. Flexible Repayment Options

Federal student loans are super flexible when it comes to repayment options. Whether you’re a grad who’s landed a job or still figuring it out, you’ve got options. Federal loans offer a wide range of repayment plans to suit different financial situations. Some of these plans are income-driven, meaning your monthly payments are based on what you earn. If you’re in a situation where you can’t make the standard payments, there are plans that can adjust based on your income.

Even better, some federal loans offer loan forgiveness programs if you work in certain jobs or serve in the military. If you meet the program requirements, part or all of your loan could be forgiven — which means less debt to worry about.

Extra Insight: With federal loans, you’re not stuck with one rigid repayment plan. You can change your plan as your financial situation changes. Flexibility is key!

5. No Cosigners Required

Here’s one of the biggest perks of federal student loans: you don’t need a cosigner. That’s right. Unlike private loans, where you might need someone with good credit to co-sign the loan, federal student loans are all about your financial need — not someone else’s credit score. This can be a huge relief for students who don’t have a parent or relative with an excellent credit score who can help back the loan.

For many students, this is the difference between being able to get the loan at all and having to scramble to find a cosigner. With federal student loans, you don’t have to worry about finding someone else to sign on the dotted line.

Insider Tip: No cosigner means you’re 100% in control of your loan. No awkward conversations with relatives about credit scores or responsibility!

6. Easy to Consolidate

Let’s talk about consolidation. If you end up with multiple federal student loans, you can consolidate them into one loan. This means you only have to make one payment, and it can make managing your loans a lot simpler. Plus, with consolidation, you might be able to extend your repayment period, which could lower your monthly payments.

While private loans can also be consolidated, many private lenders are no longer offering this service. That means you’re stuck with multiple payments and potentially more paperwork. But with federal loans, the government has made it easy to consolidate, streamlining the whole process.

Pro Tip: Consolidation isn’t always the best option for everyone, but it’s definitely a helpful tool if you’re juggling multiple loans and want to simplify your payments.

7. Eligible for Loan Forgiveness Programs

This is the big one: loan forgiveness. Federal student loans are eligible for a range of forgiveness programs. That’s right — the government might cancel part or all of your loan if you meet certain criteria. This is particularly common for those who work in public service jobs, such as teachers, healthcare workers, or military personnel.

Some loan forgiveness programs require a number of years of service or a certain type of job, but they’re absolutely worth considering. If you’re planning on working in a field that qualifies, you could potentially have tens of thousands of dollars forgiven. That’s a major relief when you’re looking at a mountain of student debt.

Quick Reality Check: If you’re thinking about loan forgiveness, make sure you understand the requirements. Some programs have very specific rules, and you need to stay on top of them to qualify!

Federal student loans are hands down the best option for most students. From lower interest rates to more flexible repayment plans, and even the potential for loan forgiveness, they provide major benefits that private loans just can’t match. While private loans may be a necessary tool for some, especially if federal loans don’t cover your full tuition, always start with federal student loans to maximize your financial aid options.

At the end of the day, knowledge is power. Understanding the ins and outs of federal loans, and taking advantage of their perks, can make a huge difference in how you approach funding your education. Don’t hesitate to reach out to your school’s financial aid office for more information — they’re there to help guide you through the process and ensure you make the best choices for your future.