What type of federal student loan has low interest rates and does not accrue interest while the student is in school?

The correct answer is a federal student loan that is specifically designed to support students financially while they are pursuing their education, allowing them to focus on their studies rather than worrying about the accumulation of debt. This type of loan has low interest rates and includes a feature that prevents interest from accruing while the student is enrolled in school at least half-time.

While Perkins Loans were available until 2017 and provided favorable borrowing terms, they have since been phased out. They were intended for students with exceptional financial need but do not represent the current federal student loan landscape. Unsubsidized Stafford loans and Direct Loans do not share the same benefit of interest-free repayment while in school; interest begins accruing from the moment the loan is disbursed.

Understanding these loans helps students make informed decisions about borrowing and managing their education expenses effectively.