School loans

School loans are borrowed for educational purposes and then paid back with interest after the degree program is completed. Usually the repayment process begins several months after the program is finished or if the student is enrolled in a program less than half-time.

School loans are distributed by one of two programs: the William D. Ford Federal Direct Loan Program (also known as the Direct Loan Program) and the Federal Family Education Loan Program (FFEL Program). Often those loans are called “guaranteed student loans” because they are offered with no credit check.

There are some banks who offer private student loans. However, for those loans the interest can be variable, there is generally a credit check and the loan provisions may not be as favorable as those offered by the federal government.

To understand the loan process better, read the U.S. Department of Education's publication Federal Aid First.