An In-depth Look At The Federal Direct Student Loan
With so many federal student loans available, it can be quite difficult to muddle through and determine what loan program is best for a student. Should they take the Federal Direct Student Loan program or should they use the Federal Family Education Loan Program? The choices seem endless and if not done right, it could lead to serious financial ruin in the future. If you’re ready to get to college, it’s time to get an understanding of what the Direct Student Loan is and if it’s right for your situation.
When you start doing your research, you’re going to come across two types of federal student loans. One source is called the Federal Direct Student Loan Program, which the Department of Education oversees the distribution of money. The second source is the Federal Family Education Loan Program, where money is distributed by participating FFEL lenders. Each program includes the three typical federal student loans:
- Stafford Loans
- PLUS Loans
- Federal Consolidation Loans
How Do The Loans Vary/How To Choose Your Student Loan
When you start looking at the differences and similarities between the two loans, you’re going to find that they are not that much different from one another. The only difference is whether or not your college participates in them. For instance, colleges may opt to participate in only one of the programs where another college opts to participate in both. If your college participates in both, you get to choose your program. Do you go with the Federal Direct Student Loan program or do you go with the FFEL program?
How Can You Benefit From A Direct Student Loan
Remember that loans you can get from the Direct Loan Program are very similar to the ones that come from the FFEL program except for one thing: when you need to conduct business and speak with the lender, you’re going to be in touch with the federal government’s Direct Loan Servicing Center.
Five Attributes Of The Direct Student Loan: What Students Tend To Love Most About The Loan Program
- First, the loans come from and are directly managed by the U.S government.
- Second, the loans have flexible terms for repayment.
- Third, the three popular loans are included such as the Consolidation Loans, PLUS Loans for Parents and Stafford Loans.
- Fourth, the fees and interest rates are low.
- Fifth, you can manage these loans through the Internet.
What Are The Qualifications For The Federal Direct Student Loan
Direct students loan requirements are the same as any other federal student loan. To qualify, you need to be an American citizen or a qualified non-citizen/resident, you need to be enrolled in a college/university at least six hours, you need to meet income guidelines that the government and school stipulates and you have never once defaulted on a student loan.
How To Apply For The Direct Student Loan
If you want to ensure you can get money from this loan, you need to complete the FAFSA form and be sure it’s filed before the state/federal deadline. Fail to do so and you all but eliminate your chance of getting one of the many low-cost financial aid choices available to you including the Federal Direct Student Loan. Be sure you set aside some time to fill this out as it’s going to be rough. If you need assistance, speak with your high school counselor or talk with a college financial aid representative as soon as possible.
Once you have turned it in, you’ll receive award letters from the colleges/universities who have accepted you to join their institution. On these award letters, you’ll see the kinds of financial aid you are eligible to receive. If you’ve gotten either one of the above loans, your award letter will specify it.
Should you decide on the Direct Stafford Loan or the PLUS Loan, you will be required to sign a Master Promissory Note, which is a legal contract between you and the Department of Education. The DOE will be the lender when you begin making monthly payments.
How To Repay The Federal Direct Student Loan
It’s very important that you remember for any federal loan you receive, you will be given a six-month grace period. You have the option to use one of the four repayment plans based on your specific monetary requirements.
1 – Standard Repayment – This is a fixed monthly payment for no more than 10 years to pay off.
2 – Extended Repayment – This loan gives fixed/graduated payments for no more than 25 years but only on loans of $30,000 or more.
3 – Graduated Repayment – Monthly payments will increase and it must be paid off in 10 years.
4 – Income-Contingent – Monthly payments are figured up annually based upon your income.
If you have any questions whatsoever about the Federal Direct Student Loan program, do not hesitate to ask for guidance, either at your local high school or college financial aid office.
Please feel free to contact us or leave a comment below…You can always visit the U.S. Department of Education’s Direct Loan Program website for more information. Thanks
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