Does the Federal Government Offer Personal Loans?

Learn which loan options the federal government provides

By
Karon Warren
Karon Warren
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Karon Warren has 20+ years of experience researching and writing about banking, mortgages, credit cards, savings, and other personal finance topics.

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Updated October 06, 2023
Reviewed by Andrew Schmidt
Fact checked by
Vikki Velasquez
Vikkie Velasquez
Fact checked by Vikki Velasquez
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Vikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area.
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While the federal government does not specifically offer personal loans, it does offer or guarantee other loans for specific purposes. These include loans to pay for education, housing, or building a small businesses.

Learn how you will need to meet eligibility requirements to qualify for these government loans and more about the loan types that the federal government offers.

Key Takeaways

  • The federal government does not offer personal loans.
  • The federal government offers loans for specific purposes, including education, housing, and business.
  • In most cases, the federal government does not loan money directly, but works with private lenders to provide funding.

Federal Government Offers Loans for a Purpose

The federal government does not offer personal loans that borrowers could use for any reason, such as to consolidate credit card debt, buy a car, or pay for a wedding. Instead, the U.S. government offers or guarantees loans for a specific purpose like paying for education, buying housing, or starting a business.

Although not a traditional personal loan, the Internal Revenue Service (IRS) provides installment payment plans for those not able to pay their tax obligations in full by the due date. IRS installment loans include setup fees, interest charges, and penalties.

Also, while some loans are made direct, the federal government doesn’t fund every type of government loan. Instead, it guarantees loans that are funded by private lenders.  

Loans Offered by the Government 

There are numerous government loans available for a variety of purposes, including student loans and mortgages. Let’s look in more detail at the types of loan that the government provides.

Education

The federal government offers both subsidized and unsubsidized loans to help students and parents pay for tuition at two- and four-year colleges and universities, community colleges, and trade and technical schools.

With subsidized loans, a third party pays the interest on the loan for a set period of time. With unsubsidized loans, the borrower pays the interest on the loan for the life of the loan.

Government loans for education include:

Note

Most universities and schools use the Free Application for Federal Student Aid (FAFSA) to award federal aid along with state- and college-funded student aid. A student may want to consider a personal loan if they've exhausted all of their financial aid options and other sources of funding.

Housing

The U.S. government offers a number of mortgages to help borrowers buy a home or improve the home they own. These include:

If you’re shopping for a mortgage, review the eligibility requirements to see which loan is the best fit for your financial needs. For example, if you are a military veteran, you would likely qualify for a VA loan with more favorable terms than an FHA loan.

Agriculture

To help farmers and ranchers, the U.S. government offers loans to purchase or expand a farm or ranch and improve facilities. There are also loans to help those operating fishing vessels or fisheries facilities.

Agriculture loans include:

  • Farm ownership loans
  • Farm operating loans
  • Farm storage facility loans
  • Fisheries Finance Program

Agricultural loans also may have loan requirements based on your agricultural experience, the location of the property, and the commodities involved.

Business

The federal government has loans for borrowers looking to start, buy, improve, or expand a business. Small Business Administration (SBA) loans are for all businesses, from small businesses to midsize businesses to large conglomerates.

They include:

  • Small business loans
  • Microloans
  • Disaster loans
  • Economic injury loans

Federal vs. Private Loans

The primary difference between federal and private loans is that federal loans are backed or provided by the U.S. government, while private loans are provided by private lenders such as banks and credit unions. But there are other differences as well.

With federal loans, you may find it easier to get approved due to lower credit score requirements, if any. You also typically pay a lower or no down payment and can receive lower interest rates. Other benefits could include deferred payment options and no prepayment penalties.

However, due to their qualification requirements, federal loans may not be as easy to get as private loans.

What to Consider When Choosing a Loan

When considering a government loan, it’s important to first determine if there is a federal loan that meets your needs for financial assistance. Do you need the loan for education, business, or housing? If not, then a government loan may not be the right choice.

If a government loan could be the right choice, you will need to review the qualification requirements to see if you meet them. This could range from credit score to income level to location and other requirements specific to the loan.

You can use the U.S. government’s Loan Finder tool to check if there is a government loan that is right for you.

Does the Government Offer Personal Loans?

Although the government doesn’t offer unsecured personal loans for needs such as buying a car or paying for a wedding, the government does offer loans to help pay for education, buy housing, or start a business.

Which Bank Is Easiest to Get a Personal Loan from?

While there are some standard requirements for certain personal loans, many banks have their own requirements as well. It’s important to shop around to find a personal loan that you can qualify for without jumping through a lot of hoops.

What Is the Easiest Government Loan to Get?

The easiest government loan to get depends on the type of loan needed. Each government loan comes with its own list of requirements for approval.

What Credit Score Do You Need for a Government Loan?

Credit score requirements vary by government loan. Some don’t require a credit check, so your credit score won’t matter. Others have varying minimum credit score requirements.

The Bottom Line

While the federal government doesn’t offer personal loans, it does offer a variety of loans for specific purposes. If you need financial assistance to pay for education, housing, a small business, or other needs, then a government loan could be the right choice.

You would need to meet all eligibility requirements. If you do, you could get a loan with favorable terms such as low interest rates and flexible repayment terms.

Article Sources
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  1. USAGov. “How to Get a Government Loan.”

  2. Internal Revenue Service. “Additional Information on Payment Plans.”

  3. Federal Student Aid. “Subsidized and Unsubsidized Loans Page.”

  4. Federal Student Aid. “Loans Page.”

  5. GovLoans.gov. “Free Application for Federal Student Aid (FAFSA).”

  6. GovLoans.gov. “Housing Loans.”

  7. GovLoans.gov. “Agricultural Loans.”

  8. U.S. Small Business Administration. “Loans.”

  9. U.S. Small Business Administration. “Disaster Assistance.”