Student Loan Categories

An education beyond high school is an investment in your future. It can be expensive and often requires you or your family to take out loans to help pay for it.

Student loans fall into two categories, federal loans and private loans.

• Federal loans, which are subject to oversight and regulation by the federal government, include:
  • Direct Loans, where the U.S. Department of Education is the lender;
  • Federal Family Education Loans (FFEL), where private lenders make loans backed by the federal government; and
  • Federal Perkins Loans.
• Private loans, sometimes referenced as “alternative loans,” are offered by private lenders and do not include the benefits and protections available with federal loans.

Whether you’re taking out a new student loan or consolidating existing education loans, the Federal Trade Commission (FTC), the nation’s consumer protection agency, and the U.S. Department of Education (ED), the agency that oversees federal student loans, want you to know how to spot potentially deceptive claims or business practices some private companies may use to get your loan business.