Direct Student Loans

Education is of much importance for everyone, especially in this competitive society. However, the high college tuition and living expenses really disappoint many students who are in a tight budget. Direct loans are loan-interest loans for parents and students to help pay for the cost of a student’s education after high school. What is more, the lender of this loan is the US Department of Education rather than a bank or some other financial institutions. Therefore, students need not to worry about the high interest or illegal loan agreement.

Students who plan to apply for the direct student loan have to be enrolled at least half-time at a school. At the same time, they have to meet the general eligibility requirements for the Federal Student Aid program. If you are qualified for the loan, you will be able to borrow directly from the federal government even if you receive direct student loans at different schools.

Main Types of Direct Student Loans

Generally, there are three types of direct student loans that students can reach in the United States. All of them have their own features and disadvantages. Students can choose any of them according to their actual financial situations and needs.

• Direct Subsidized and Unsubsidized Loans: Best designed for students who are in want of financial aids, Direct Subsidized Loans charge no interest during the grace periods and deferment periods. But the Direct Unsubsidized Loans charge interest during all periods of your loan term.

• Direct PLUS Loans: If you choose this loan, you will be charged interest during all periods. This loan is available to students who are pursuing a graduate or professional degree.

• Direct Consolidation Loans: People who are considering combining different federal student loans into one Direct Consolidation Loan can take this loan solution.

How to Apply for Direct Student Loans?

Direct student loans are available to incoming freshmen students, working students and even people who want to go back to school. Usually, the loans are given out three months before the start of school in September. The earlier you submit your application, the better your chances of qualifying. If you are interested in applying, just inquire to the US Department of Education.

The following steps will be useful for all the applicants

• Fill out an application form.

• Take an interview, during which you will be asked some personal questions and some other matters.

• Then, you need to complete a Master Promissory Note which is a legally biding agreement to repay your loan to the US Department of Education.

Repayment for Your Direct Student Loans

There are four repayment options available to students who take the Direct Student Loans

1. Standard: This option asks the borrowers to pay a set amount of money every month, say at least $50. Above all, the loan has to be paid off within ten years. As for the actual payment amount and payoff period, they all depend on the borrower’s outstanding loan balance.

2. Extended: The main difference between the standard and extended repayment lies in that the extended repayment does not have to be paid off so quickly. Therefore, the interest rate is much higher than that of standard one.

3. Graduated: The monthly minimum payments of this type of repayment fluctuate. The payments begin as a low amount and increase every two years or so. Plus, the final payoff date ranges from 12 to 30 years.

4. Income Contingent: This type of payment is based on income and will fluctuate in accordance with the student’s income. Thus, the Income Contingent payment is much more scientific and reasonable than those above.

The ABCs of Direct Student Loans

The importance of direct student loans won’t go unnoticed. Low-interest, free of unnecessary hassles, they are designed to help students and parents with financial problems to cover higher education. Supervised by the U.S. Department of Education, direct student loans lend a helping hand to those in need.

Federal direct student loans are of various features. They come with multiple types, each of which has different interest rates. To apply for them, just hop online and fill out the Free Application for Federal Student Aid (FAFSA) on the Web as most students do.

When it comes to federal student loans, there are several things involved, for example:

• Loan servicing

The role direct student loan servicing plays is in the arrangement of dealing with the various aspects of direct student loans. Loan servicer, the provider of this servicing can be the federal government servicer, non-profit organizations and some private companies.

• Loan repayment

Direct student loan payment offer more than one plans for you to choose from. One thing these plans have in common is that they are designed to meet the needs of most students and can be changed when needed.

• Loan consolidation

Direct student loan consolidation can be done by simply combining all your federal education loans into one new loan. With the consolidation, you will have one lender and one reduced monthly payments.


Read Also:

Federal Direct Student Loan Options – A Helping Hand for Your Study

Education is the foremost and basic footstone for each country. Students are the future for a nation. However, universities and colleges have become really expensive, which means that not all the families can afford it. In most cases, numbers of students look to take out loans to cover the balance of school expenses and living cost when money is just not there or short.